Mar
20
2025
Business Check vs. Personal Check: What's The Difference?

Guide to Business Checks vs Personal Checks

By | Budgeting & Goals, Financial Independence, money | Comments Off on Guide to Business Checks vs Personal Checks

While business checks and personal checks may seem like the same thing, there are actually some important differences. Sure, all checks can be used to pay bills or cover other expenses using funds in a linked checking account. But the main difference between a personal check and a business check is the source of funds. Personal checks are drawn on personal accounts; business checks are drawn on business checking accounts.

Learn more about how these checks work and how they differ.

What Is a Business Check?

A business check is a check that’s written from a business checking account. Banks and credit unions can offer business checking accounts to sole proprietors, limited liability companies (LLCs), and other kinds of businesses that need a safe, secure place to keep their money. Business checks are often one of the features included with these accounts.

Business bank accounts can also offer a debit card for making purchases or cash withdrawals. They typically allow for ACH transfers of funds to pay bills or vendors. But there are some instances where it could make sense — or even be necessary — to use business checks instead. For example, you may need to write or print paper checks to cover payroll for employees.

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How Does a Business Check Work?

When someone opens a business bank account, the bank may give them a set of business checks and a checkbook. If you are wondering what a checkbook is, they are simply a small folder or book that contains your checks and a check register, which is where you’ll write down deposits and credits for your account. Check registers can help you balance your checkbook.

To use a business check, you’d simply make the check out to the payee, then fill in the required information. That includes the date and amount of the check, as well as a signature. Business checks typically have a memo line where you can record what the check is being used for.

The payee can then take that business check to their bank to deposit it or cash it. The amount written on the check is then deducted from the business checking account on which the check is drawn. When the check is deposited, it typically takes two days to clear (or for the funds to become available).

What Does a Business Check Look Like?

Business checks look much like personal checks, in terms of the type of information they include. On the front of a business check, you should see the following:

•  Business name and address

•  Check number (in the upper right hand corner)

•  Payee name (where it says Pay to the Order of)

•  Date

•  Dollar amount, in numbers

•  Dollar amount, in words

•  Payer’s signature

•  Memo line

•  The bank’s routing number

•  The account number

•  Bank’s name and address

Business checks may also include room to include the business logo or a watermark.

There may be an attached transaction stub on the left hand side of the check. You can use this stub to record the details of the transaction, including the date the check was written, the amount, and to whom it was paid.

Business checks can be hand-written like personal checks, or they can be filled digitally and printed out.

What Is a Personal Check?

A personal check, on the other hand, is a check that’s drawn against a personal checking account. Most but not all checking accounts offer checks and check-writing; some even offer free starter checks to new customers.

Personal checks are paid using personal funds. So you might write a personal check to repay a friend you borrowed money from, for example, or to pay your rent. Likewise, you could receive a personal check made out to you that you could deposit into your bank account or cash it. In terms of where to cash personal checks without a bank account, the options include check cashing services, supermarkets, and convenience stores.

Personal checks are not the same as other types of checks, including certified checks and traveler’s checks. (If you’re unfamiliar with how to use traveler’s checks, these are paper certificates that can help you pay for things overseas without having to exchange hard currencies.)

How Do Personal Checks Work?

Personal checks work by allowing individuals to pay bills or make other payments to individuals, businesses, and other organizations. When you open a checking account, the bank may give you paper checks with your name and account number printed on them. You can then use these checks to make payments.

When someone receives a personal check and deposits it in their account, their bank requests the transfer of funds from the bank on which the check was drawn. These transfers are processed electronically. Processing times can vary, though it typically takes a couple of business days for a check to clear.

If someone writes a personal check and doesn’t have sufficient funds in their account to cover it, that check will bounce. When a check you write bounces, it may be returned unpaid or your bank may cover the amount for you but they can charge overdraft or non-sufficient funds (NSF) fees for that convenience.

Bounced checks typically don’t show up on consumer credit reports or affect credit scores, though banks may report them to ChexSystems. A consumer credit reporting agency, ChexSystems collects information about closed checking and savings accounts.

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Can I Use a Personal Check for a Business Account?

Personal accounts and business accounts are separate banking products. That being said, you could use personal checks to pay for business expenses. For example, you could write out a personal check to pay a business lease or make payments to a business loan. And you could use funds in a business account to pay for personal expenses.

If you feel you must use personal checks for a business account or business checks for personal expenses, proceed with caution. Many personal checking account agreements specifically prohibit using this kind of account for business purposes. Familiarize yourself with your account guidelines. This should only happen in very limited circumstances and not as a regular practice.

What’s more, mixing your accounts this way can complicate matters when it comes time to pay your taxes and figure out personal vs. business deductions. If you ever need to review your business or personal account (say, for legal reasons or an audit), it can be hard to remember which funds were used where.

Using Business Checks vs. Personal Checks

When you need to write a business check vs. personal check can depend on the circumstances. For instance, some of the most common uses for business checks include:

•  Employee payroll

•  Federal and state tax payments

•  Making payments to vendors

•  Paying operating costs, such as rent or utilities

•  Repaying a business loan

•  Making any large purchases that are necessary for the business.

Personal checks can be used to meet a different set of needs. Examples of when you might write a personal check include:

•  Paying utility bills, rent, or the mortgage

•  Buying groceries

•  Repaying personal debts

•  Making payments to loans

•  Covering school-related expenses if you have kids (like lunch money or PTA fundraisers)

•  Paying college tuition

•  Covering doctor bills.

Whether you need business checks or personal checks, it helps to know where to order checks safely. You can get checks online from check-printing companies or order them through your bank.

Recommended: How Do I Sign Over a Check to Someone?

Differences Between a Business and Personal Check

Whether you’re using business checks or personal checks, one thing is true: They can be a dependable, convenient way to move money. They provide an alternative to using a debit card, credit card, ACH transfer, or wire transfer. But if you’re still wondering how business checks are different from personal checks, here are a few other noteworthy distinctions.

Size of the Check

Personal checks are usually somewhere around 6″ x 2″ x 3″ in size. Business checks, on the other hand, might or might not be larger in size. For example, they may be 8″ x 2″ x 3″ instead. The larger size allows for easier printing and more room for writing out checks by hand.

Security of the Check

Check fraud can threaten a business’s bottom line. For that reason, many check printers include built-in security measures to minimize the chances of a business check being stolen or otherwise used fraudulently. Those measures can include holographic features, thermochromatic ink, and chemically sensitive paper. These features all help to verify a check’s authenticity.

How Much Each Check Costs

As mentioned, banks can sometimes offer starter checks for free when you open a new checking account. This benefit may not be included with business checking accounts, which means you might need to buy checks yourself. The amount you pay can depend on the type of check, any added features you choose to include, and the number of checks printed. You might pay three cents per check or a quarter or more per personal check, depending on where you order from, the features you want, and how quickly you want them printed and delivered.

Business checks range in cost, but many online retailers charge 20 to 30 cents each.

There can be other charges associated with checks. For example, you may also pay separate fees when purchasing cashier’s checks for a business or personal account. Cashier’s checks are drawn against the bank’s account, not yours, though a cashier’s check looks very much like a personal or business check.

Check Conversion Protection

Check conversion is a process in which paper checks are converted to electronic ACH debits. Both consumer and business checks can be converted in this way. Converted checks usually clear faster, but it’s possible that you may not want this for checks written from a business account. In that case, you could order business checks that include an optional Auxiliary On-Us field to exclude them from conversion.

Why to Consider Having Separate Checks

Using one bank account for business and personal expenses might seem simpler and less stressful, since you’re moving money in and out of the same place. However, as noted above, which kind of check to use is not typically a matter of personal choice. Personal checking accounts usually have restrictions against use for business purposes.

What’s more, establishing a business account has other benefits:

•  Writing checks with your business name can add credibility to your venture, since it looks more professional.

•  A business account helps you keep track of business finances and expense reporting for tax purposes.

•  Establishing a business checking account could make it easier to get approved for business loans or lines of credit if you have a good banking history.

•  Having separate business and personal checking accounts can provide an added protection against creditor lawsuits. Depending on how your business is structured, money in a personal checking account may be safe from collection efforts if you’re sued by a creditor.

The Takeaway

Business checks and personal checks serve similar functions; they both transfer funds from one account to another. However, they do have some important differences, and you typically cannot use a personal check for business purposes.

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FAQ

Can you cash a business check?

You can cash a business check if your bank allows it. You’ll need to endorse the check properly and show proof of identification to cash it, the same as you would with any other type of check.

What should be on a business check?

A business check should include the business name and address, the payee’s name, the amount of the check, the date, and the payer’s signature. The check will likely be pre-printed with the bank’s name and address, a routing number and account number, as well as a check number. A business check may also include a memo line to record the purpose of the check.

Do checks need to say LLC?

Checks do not need to say LLC unless your business is structured as an LLC. If your business operates as a sole proprietor, partnership, S corporation, or anything other than an LLC, then you wouldn’t need to include that designation.

About the author

Rebecca Lake

Rebecca Lake

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


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Mar
20
2025
14 Budgeting Questions to Ask

14 Budgeting Questions to Ask

By | Budgeting & Goals, money | Comments Off on 14 Budgeting Questions to Ask

Making a budget is often the first step in building a solid financial foundation. It helps you get better acquainted with how much money you earn, spend, and save. What’s more, it provides guidance and guardrails to help you hit the financial goals you’re focused on, whether that means saving for a vacation in Tuscany or the down payment for your dream house.

But budgets are not “set it and forget it” tools. The process can involve plenty of trial and error, and you may benefit from refining your plans along the way. In fact, it’s a good idea to check in on your budget every month, quarter, and/or year to make sure it’s still serving you well.

That’s where budgeting questions come in. Whether you’re just starting to budget or have been doing it for years, the following list of budget-specific questions can help you fine-tune your financial plan and stay on track. When asked regularly, these questions can yield surprising insights and adjustments to enhance how you manage your money.

Key Points

•   Reviewing your budget every month, quarter, and/or year can help ensure your spending is on track and you’re making progress towards your goals.

•   Having a list of budgeting questions can help simplify the budget review process.

•   It’s a good idea to save 10% to 15% of income for retirement, adjusting based on retirement timing.

•   Aim to build and maintain an emergency fund that can cover three to six months of living expenses.

•   Apply debt repayment strategies, like the 50/30/20 rule, to balance debt reduction with savings.

How Questions Can Help You Budget Better

Asking questions about budgeting can be a wise move because everyone’s financial situation is different. The way that your parents or best friends budget may be entirely different from the way you approach managing your money. By checking in and assessing where you stand, you can help improve your financial outlook.

The right budget questions can give you insight into things like:

•   Why you should budget in the first place

•   What you hope to achieve from keeping a budget

•   Where your biggest budget pitfalls are

•   How you can improve your budget

To put it another way, asking budgeting questions can help you better understand where you are financially, where you’d like to be, and how a budget can help you to get there.

In terms of how often you should be asking questions about budgeting, there’s no set rule of thumb. You might check in monthly if you’re just getting started, then ease back to every few months. At the very least, it’s a good idea to do an annual budget review to see how your spending has evolved over the year. It’s also a good time to see what adjustments you might need to make as you set new financial goals for the year ahead.

14 Budgeting Questions That Can Help You

Not sure which budget questions to ask? The following checklist covers some of the most important things to consider as you make your monthly spending plan and keep tabs on it.

1. Am I Prepared for Unexpected Expenses?

Saving for financial emergencies is an important part of budgeting. When you don’t have money to cover an unexpected expense, you run the risk of having to use a high-interest credit card or loan to cover, say, a car repair or a major dental bill.

One of the first budget questions to consider is how much you have saved toward emergencies. If the answer is “0” in liquid funds you could quickly tap, you may want to think about how much you need to save for emergencies and how to fit that savings goal into your budget each month.

2. What is a Good Amount for an Emergency Fund?

A general rule of thumb is to keep three to six months’ worth of expenses in a separate savings account earmarked for emergencies. However, a good amount for an emergency fund for you can depend on your income, expenses, and how much money you need to have in the bank to feel comfortable.

If you’re single and have side-hustle income on top of your regular paychecks from a job, for instance, you might be okay with one to two months’ worth of expenses saved. On the other hand, if you’re married with two kids and are the primary breadwinner, it’s a much different situation. You might be more at ease with nine to 12 months’ worth of expenses saved instead.

When you’re starting from zero, aiming for $500 or $1,000 can be a good way to ease into a savings habit. You can then review your budget monthly to see where you might be able to find additional money. Every little bit counts ($20 here, $35 there) until your emergency savings hits a level that allows you to breathe a sigh of relief.

Recommended: Savings Account Calculator

3. How Much Debt Should I Pay Down Each Month?

Debt can make it difficult to reach your financial goals, especially if a big chunk of your income is going to credit cards, student loans, or other debts. With high-interest debt (like credit cards), it’s generally a good idea to pay as much as you can in excess of the minimum payment each month. This will help speed up repayment and save you a significant amount of money on interest. With other types of debt, however, you may want to strike a balance between debt repayment and saving. With the 50/30/20 rule of budgeting, 50% of your income goes to needs; 30% goes to wants; and 20% goes to debt payments beyond the minimum and savings.

4. Did I Overspend? If So, Where?

This is another great budgeting question to ask when reviewing your budget monthly if you’re trying to stop overspending. Going through each budget category and analyzing how much you spent can help you pinpoint the money leaks in your financial plan.

Once you find the leaks, you can take steps to plug them. For example, if you noticed that you’re spending more money on dining out, then planning meals at home and committing to that plan is a relatively simple fix. Or you might decide to audit your subscription services and cut out anything you’re paying for but not using. Those are simple ways to cut back on spending.

5. Do I Need to Adjust Spending Limits?

Reviewing your spending each month can help you figure out where you might be overdoing it. But it’s also an opportunity to see how inflation and rising prices might be affecting your expenses. If you notice that you’re spending more on groceries or gas, for instance, then you may need to adjust your budget and trim other areas of spending to compensate for those higher costs.
You might also decide to adjust spending limits down if you want to dedicate more of your budget to saving or debt repayment. So again, instead of eating out you might stick to having meals at home which can be more cost-effective. If that saves you $100 a month, you could add that sum to your emergency fund or make an extra payment to your student loans.

Recommended: Budgeting for Beginners: A Guide

6. What Are My Money Priorities?

Knowing your money priorities is important as they can influence the financial decisions you make. You could ask this budgeting question monthly. But if that feels like too much, aim to consider it at least once a year to see how life changes might affect your answers.

For example, your money priorities might include spending on travel or recreation in your 20s. But once you hit your 30s, your focus may shift to saving, paying down debt, and taking other steps to work toward financial stability and security.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 3.80% APY on savings balances.

Up to 2-day-early paycheck.

Up to $3M of additional
FDIC insurance.


7. Am I Tracking Toward My Financial Goals?

Tracking your financial goals can give you motivation to stick with your money plan. It’s also an easy way to see how you’re progressing toward them.

Whether your goals include paying down debt, building an emergency fund, or saving for a vacation, you can ask this budget question monthly to gauge how you’re doing.

If you see that you’ve made little progress over the past few months, for instance, you can then ask yourself what you can do to change that and get closer to your goals.

8. Am I Happy About the Purchases I’ve Made?

Some things you have to spend money on, but others you buy because you want to. That’s the difference between needs vs. wants, and understanding that is an important part of budgeting.

If you find yourself spending money more often than you’d like on things that aren’t necessities, ask yourself what you’re getting from those purchases. Dropping $5,000 on a once-in-a-lifetime vacation might be justified if you get a chance to create lasting memories. Spending that same $5K on new clothes, on the other hand, might give you a temporary boost, but you may end up regretting that purchase later.

Considering what you’re getting from spending money can give you clarity on your financial priorities. It can also help you to identify bad money habits that might be hurting your financial situation.

9. What Would My Budget Look Like Without Debt?

Living debt-free might seem like a dream but it’s possible to make it a reality with the right plan. If you have debt that you’re paying down monthly, ask yourself what your budget might look like if you didn’t have to make those payments. That could give you a push to dedicate more money toward debt repayment so you can eliminate those obligations faster.

There are lots of debt reduction strategies you can use, including the debt snowball and debt avalanche techniques. If you’re tracking your debt repayment progress and aren’t getting ahead as fast as you’d like, you might review your budget to see if another method might be more effective.

When it comes to credit card debt, you might investigate balance transfer credit card offers, which give you, say, 18 months during which you pay no interest. This can help some people pay down the amount they own. You might also seek advice from a nonprofit credit counselor.

10. Is There a Way to Increase My Income?

Making more money can give your budget a boost. When income goes up, paying bills becomes less stressful. It may also be easier to knock out debt or grow your savings.

How often you ask yourself this budget question can depend on your situation, but it’s worth pondering it at least once a year. Some of the ways you might be able to increase income include getting a part-time job, taking on more hours at your current job, negotiating a raise, or starting a low-cost side hustle.

11. How Much Should I Budget for Investments?

Investing money and saving it are two different things. When you invest money, you’re putting it into the market where it has more opportunity to grow. There’s greater risk involved vs. saving, but the rewards can be greater as well.

The amount you should budget monthly for investing can depend on how much you have left after covering basic expenses, how much you’re saving for emergencies or other short-term goals, and how much you’re paying towards debts. (You also want to spend a little on those “wants” mentioned above; otherwise, you’ll end up feeling deprived.)

Depending on the details of your situation, aiming to invest 10% might be a good place to start and you can build on that amount year over year as you pay down debt or increase your income.

12. How Much Should I Save Each Month for Retirement?

Paying yourself first is a fundamental rule of personal finance and it’s a good way to build the wealth you need to retire. When reevaluating your budget each year, it’s a good idea to look at how much you’re saving for retirement.

The exact amount you’ll need to save monthly will depend on your retirement goals and age. Financial experts often recommend saving at least 10% to 15% of your annual take-home income for retirement (including any company match).
However, you might need to double or even triple that if you’d like to retire early or you’re getting a late start.

Look at what you’re putting into your 401(k) at work if you have one. If you’re not contributing enough to get the full company match, then consider bumping up your contribution rate to max out this benefit (which is essentially free money).

13. What Are My Goals This Month?

Financial goal-setting often involves looking well into the future. For instance, you might want to save $50,000 for a down payment on a home or $1 million for retirement. But you can also set goals that you hope to achieve month to month.

For example, you might set a goal of getting three car insurance quotes from different companies if you’re hoping to get a better rate. Or you might have a goal of not spending money for 15 days out of the month. These kinds of short-term goals can help you move ahead financially without losing sight of your bigger money picture.

What’s more, succeeding at small financial goals can build your confidence to tackle larger ones.

14. How Can I Stay Consistent In Keeping My Budget?

Making a budget is important, but sticking to it matters even more. Examining your income and expenses monthly is helpful, but asking the key question, “How can I stay consistent with my budget?” can also be vital. Doing so can help you figure out what might be tripping you up and what you can do to be more consistent with your spending plan.

You might decide to do weekly or biweekly budget check-ins versus reviewing your budget once a month. Or you might start using a budgeting app that tracks your daily and weekly spending. These tools often link to your checking account and credit cards and will automatically download transactions. This can help you catch — and correct — small cash flow problems before they become bigger and completely derail your budget.

The Takeaway

The great thing about making a budget is that there’s always room to tweak and improve things. Asking the right budget questions is a good way to figure out what’s working (and what’s not) so you can make the most of your money each month.

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 3.80% APY on SoFi Checking and Savings.

FAQ

How many budget categories should I have?

There’s no single right answer to how many budget categories someone should have. It’s possible to have 100 budget categories or more, depending on how much detail you go into when dividing up your income and expenses. At a minimum, you may want to have budget categories for fixed expenses, discretionary expenses, variable expenses, saving, and debt.

What does a realistic budget look like?

A realistic budget takes into account all of your income and divides it up to pay for your needs (including debt repayment) and some wants, as well as allowing room for saving. It should allow you to manage your money without feeling stressed or anxious.

How do you plan a budget?

Planning a budget starts with understanding your income and then diving into your expenses. As you make your budget, you can assign income to each expense you have, starting with the most important ones first. That usually means housing, utilities, food, transportation, and insurance. Paying down debt is also often a priority. From there, you can continue dividing up income to cover discretionary spending and savings.

About the author

Rebecca Lake

Rebecca Lake

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


Photo credit: iStock/MicroStockHub

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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.

SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 during a 30-day Evaluation Period (as defined below).

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 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, 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 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY 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, 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 members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

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

SOBNK-Q424-027

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Mar
19
2025
piggy banks pink and yellow background

How to Transfer Money From One Bank to Another

By | Budgeting & Goals, Financial Independence | No Comments

If you need to transfer money from an account at one bank to an account at another, you have several options, including online bank transfers, mobile payment apps, wire transfers, and writing checks. Which method will work best will depend on how quickly you need to make the transfer, how much money you are moving, and whether or not you’re willing to pay a fee. Here’s what you need to know.

Key Points

•   Bank-to-bank transfers, also called external transfers, are a way to move money from an account at one bank to an account at another bank.

•   These can be done by online transfers, peer-to-peer services, wire transfers, and checks.

•   There may be limits on how many bank transfers you can do and how much you can send in a specific time period.

•   Wire transfers are typically fast and allow for higher transfer limits; writing a check is slower but has no to minimal costs.

•   The time it takes to complete a bank transfer may vary with each method.

What Is a Bank-to-Bank Transfer?

A bank-to-bank transfer is the movement of money from an account at one bank to an account at a different bank. Also known as an external transfer, this type of transaction can be done in numerous ways, including making an online transfer, using a mobile banking app, making a wire transfer, or writing a check.

You might make a bank-to-bank transfer if your funds are spread out at different banks. For example, maybe you have a checking account at a traditional bank but opened a savings account at an online bank to take advantage of the higher rates. Bank-to-bank transfers can also come into play when you’re sending money to friends and family.

Depending on the method, an external bank transfer can happen immediately, or it may take a few days to process.

Things to Consider Before Transferring Money

There are several different methods for sending money from one bank to another. To find the best option for your needs, you’ll want to consider:

•   Transfer speed: Bank transfers can take anywhere from a few seconds to several business days. If time is critical, opt for a faster transfer method, but be aware that this may come with higher costs.

•   Transfer fees: While many transfer methods are free, others may come with fees. You’ll generally pay more for wire transfers and expedited transfers.

•   Transfer Limits: Some banks and payment apps impose limits on how much you can transfer per day or in any one transaction. Additionally, banks often limit the number of withdrawals you can make from a savings account to six per month; exceeding your bank’s transaction limits could result in a fee.

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4 Ways to Send Money From One Bank to Another

Here’s a look at four common ways to transfer money to an account at another bank.

1. Online Bank Transfer

A simple way to move money from an account you own at one bank to an account you have at another financial institution is to make an online bank transfer. To illustrate the process, let’s say you want to transfer money from a checking account at Bank A to a savings account you own at bank B.

•   Link the accounts: First, you’ll need to log into your account at Bank A (online or using the app), look for the “transfer” option, then choose “external” transfer. Enter Bank B’s routing number and your account number at that bank.

•   Verify the receiving account: After you provide the required information, Bank A will likely want to verify that you have access to the second bank’s account. You might need to enter your username and password for Bank B. Or, Bank A may make a small deposit into Bank B and ask you to confirm the amounts (which can take a day or two).

•   Make the transfer: Once the accounts are linked, navigate back to Bank A’s “transfers” section, select the “sending” and “receiving” accounts, then enter the amount to be transferred and the date for the transaction to occur. You can also typically choose whether you want to make a one-time transaction or a recurring transfer (once a month, for example). After you’ve made your choices, you’ll hit “submit.”

Online bank transfers can take up to three business days to complete and are typically free; some banks charge a fee for same- or next-day transfers.

2. Peer-to-Peer Payment App

A convenient way to send a small amount of money to a friend, family member, or small business is to use a peer-to-peer or P2P payment app, such as Cash App, Google Pay, and Venmo. Typically, you need to download the app, create an account, and link your bank account or debit card. You’ll also need the recipient’s cell phone number or, in some cases, email address (note that the recipient also needs an account with the service).

Sending funds via a P2P app is typically instant. However, the funds may land in the recipient’s account within the app. The recipient can then typically transfer those funds to a bank account within one to three business days (for free) or immediately (for a fee).

Payment apps may limit how much you can transfer in one transaction or within a certain time frame. This is to help minimize the risk of a fraudster draining your account.

3. Wire Transfer

A wire transfer can be a good way to make a bank transfer when you need to send a considerable amount of money to someone quickly and/or the recipient is located overseas. Wire transfer generally allows you to send more money than other methods, and funds are usually available within one business day — often within a few hours. Wire transfers aren’t free though. You may pay around $25 for a domestic wire transfer and $45 for an international wire transfer. Wire transfers can be done through banks, credit unions, or providers such as Western Union or Wise.

4. Writing a Check

An old-school way of transferring money from one bank to another is to write a check. You can write a check to yourself (using your name as the payee), then deposit it into an account you own at another bank using mobile deposit. You can also deposit the check at an ATM that accepts deposits or by visiting a branch. If you’re looking to transfer money to someone else’s bank account, you can write a check to that person.

This transfer method is free, except for the cost involved in ordering checks.

Keep in mind, however, that writing a check is not an instant money transfer. It can take a couple business days, and sometimes longer, for a check to clear and be available in the new account.

Comparing Bank-to-Bank Transfer Methods

Here’s a quick look at how bank-to-bank transfer methods compare.

Transfer Method

 Speed

 Cost

 Best for
Online transfer 1-3 days Typically, free Routine transfers between accounts you own
Payment App Up to 3 days to get money into bank account Typically, free Small transfers between individuals
Wire Transfer Often within a few hours $25-$45 Large, time-sensitive transfers and international transfers
Personal Check Typically up to 2 business days Free besides cost of buying checks Moving money when other methods aren’t available

Staying Safe When Transferring Money from One Bank to Another

Transferring money from one bank to another by any of the above methods is generally safe and secure. However, there are a few things to keep in mind with each method to ensure that nothing goes awry.

•   Online bank transfers: This type of bank transfer uses the Automated Clearing House (ACH) network, which is federally regulated and secure. The main risk with an ACH transfer is having a scammer trick you into sending money or giving them your banking information. If you ever suspect bank fraud, reach out to your bank as quickly as possible.

•   Payment apps: Since payment is typically transferred to the recipient’s account in the app almost instantly, there’s no way to cancel a P2P payment once it’s been made. For this reason, it’s critical to only transfer funds to a verified person or business and be sure to use the correct phone number or email address.

•   Wire transfer: Speed is a big advantage of wire transfers but it can also be a disadvantage, since you typically can’t cancel a wire transfer once the money lands in the recipient’s account. Be sure you only wire money to someone you know.

•   Personal check: There is a small risk of a check being stolen or lost. However, a key advantage of this method of money transfer is that you can cancel checks if they haven’t cleared. To stop a check, contact your bank right away. In some cases, you’ll need to pay a stop-payment fee.

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The Takeaway

With the prevalence of digital banking and money transfer apps, sending funds from one bank to another has become significantly quicker and more convenient. Options include online bank transfers, mobile apps, wire transfers, and writing checks. Which one to pick will depend on whether or not you own both accounts, how much you are transferring, how quickly you want the funds moved, and how much (if any) in fees you are willing to pay.

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 3.80% APY on SoFi Checking and Savings.

FAQ

What is the easiest way to transfer money from one bank to another?

Generally, the easiest way to transfer money between banks is by making an online bank transfer or using a peer-to-peer payment platform or app. These options are secure, user-friendly, and often accessible within your banking app, making them ideal for both personal and external transfers.

Can I directly transfer money to someone else’s bank account at a different bank?

Yes, you can directly transfer money to someone else’s bank account at a different bank through a wire transfer, or you could write them a check. Another simple way to send them money is through a peer-to-peer (P2P) payment platform or app. These services are often free, especially for domestic transactions, and are available through most banking apps or as standalone apps.

Can you transfer large amounts of money between banks?

Yes, you can transfer large amounts between banks. If you’re sending a large amount of money to someone else, you may want to use a wire transfer at your bank. You’ll need the recipient’s account and routing numbers, and both you and the recipient will likely incur fees. If you’re moving a large amount of money between accounts you own, you can do this for free by making an online external bank transfer. You can set this up by logging into your account online or via your banking app.

How to transfer money from one bank to another for free?

If you own both accounts, you can transfer money between banks for free by logging into your bank account and setting up an external transfer. Another free option is to use a peer-to-peer (P2P) payment app, which offers fast transfers to recipients who also have an account with the service.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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.

SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 during a 30-day Evaluation Period (as defined below).

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 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, 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 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY 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, 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 members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://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.

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Mar
19
2025
What’s the Difference Between a Certified Check and a Cashier’s Check?

What’s the Difference Between a Certified Check and a Cashier’s Check?

By | Budgeting & Goals, Financial Independence, money | Comments Off on What’s the Difference Between a Certified Check and a Cashier’s Check?

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

Key Points

•   Cashier’s checks and certified checks are both secure payment options, but there are important differences between them.

•   A cashier’s check is guaranteed by a bank or credit union, while a certified check is guaranteed by the individual making the payment.

•   Cashier’s checks are usually considered the safest form of payment and are often required for major transactions, such as a real estate purchase.

•   Certified checks work more like personal checks with the bank saying there are funds to cover the amount as an extra layer of protection.

•   Alternatives to cashier’s checks and certified checks can include money orders, P2P payments, and money transfer services.

🛈 Currently, SoFi does not offer members certified checks or cashier’s checks.

What Is a Cashier’s Check?

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

How Do Cashier’s Checks Work?

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

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

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

What Is a Certified Check?

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

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

How Do Certified Checks Work?

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

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

Which Check Is Safer?

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

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

Differences Between a Cashier’s Check and a Certified Check

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

Source of Funding

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

Check Signature

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

Payer of the Check

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

Funds Availability

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

How It Works

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

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

Guarantees

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

Costs of Checks

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

Safety of Checks

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

Avoiding Scams and Fraud

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

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

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

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

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

Alternatives to Cashier’s Checks and Certified Checks

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

Money Orders

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

P2P Payments

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

Money Transfer Services

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

Test your understanding of what you just read.

The Takeaway

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

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

FAQ

Do certified checks clear immediately?

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

Can you get scammed with a certified check?

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

Is it safe to accept a cashier’s check?

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

Photo credit: iStock/Dilok Klaisataporn


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. ©2025 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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.

3.80% APY
SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 during a 30-day Evaluation Period (as defined below).

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 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, 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 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY 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, 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 members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://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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19
2025
Fixed Expense Vs Variable Expense

Fixed Expenses vs Variable Expenses

By | Budgeting & Goals, Financial Independence, money | Comments Off on Fixed Expenses vs Variable Expenses

A budget can be a great tool for managing your money and making it work harder for you. But typically a budget involves distinguishing between fixed expenses (those that stay constant, month after month) and variable expenses, which change over time.

Understanding where your money is going in these two ways can be helpful as you work to track and optimize how you earn, spend, and save.

What’s important to know is that each kind of expense can be lowered in many cases, and fixed vs. variable expenses don’t necessarily translate as needs vs. wants.

Here, you can learn more about these two ways you spend money and how to pay less. You will likely find smart tips for how you can budget even better.

Key Points

•   A budget helps manage money by distinguishing between fixed expenses (constant) and variable expenses (fluctuating).

•   Fixed expenses include rent, mortgage, insurance premiums, and gym memberships, while variable expenses include groceries, utilities, dining out, and entertainment.

•   Both fixed and variable expenses can be reduced, but cutting fixed expenses may require bigger life changes.

•   Examples of fixed expenses are mortgage payments, car payments, student loan payments, and subscription fees.

•   Examples of variable expenses are utilities, food, dining out, entertainment, and travel.

What Is a Fixed Expense?

Fixed expenses are those costs that you pay in the same amount each month — items like your rent or mortgage payment, insurance premiums (which can be an often-forgotten budget expense), and your gym membership. With fixed expenses, you know the amounts you will owe ahead of time, and they don’t change (or perhaps only annually).

Fixed expenses tend to make up a large percentage of a monthly budget since housing costs, typically the largest part of a household budget, are generally fixed expenses. This means that fixed expenses present a great opportunity for saving large amounts of money on a recurring basis if you can find ways to reduce their costs. However, cutting costs on fixed expenses may require bigger life changes, like moving to a different apartment — or even a different city, where the cost of living is lower.

Keep in mind, too, that not all fixed expenses are necessities — or big budget line items. For example, an online TV streaming service subscription, which is withdrawn in the same amount every month, is a fixed expense. It’s also a want as opposed to a need. Subscription services can seem affordable until they start accumulating and perhaps become unaffordable.

Examples of Fixed Expenses

Here are some examples of fixed expenses:

•   Mortgage payments or rent

•   Car payments

•   Student loan payments

•   Membership and subscription fees

•   Insurance premiums

•   Childcare or tuition payments

•   Internet or mobile phone fees

💡 Quick Tip: An online bank account with SoFi can help your money earn more — up to 3.80% APY, with no minimum balance required.

What Is a Variable Expense?

Variable expenses, on the other hand, are those whose amounts can vary each month, depending on factors like your personal choices and behaviors as well as external circumstances like the weather.

For example, in areas with cold winters, electricity or gas bills are likely to increase during the winter months because it takes more energy to keep a house comfortably warm. Grocery costs are also variable expenses since the amount you spend on groceries can vary considerably depending on what kind of items you purchase and how much you eat.

You’ll notice, though, that both of these examples of variable costs are still necessary expenses — basic utility costs and food. The amount of money you spend on other nonessential line items, like fashion or restaurant meals, is also a variable expense.

In either case, variable simply means that it’s an expense that fluctuates on a month-to-month basis, as opposed to a fixed-cost bill you expect to see in the same amount each month.

Examples of Variable Expenses

Here are specifics of what can constitute a variable expense:

•   Utilities

•   Food

•   Dining out

•   Entertainment

•   Personal care

•   Travel

•   Medical care

•   Gas

•   Property and car maintenance

•   Gifts

💡 Quick Tip: Your money deserves a higher rate. You earned it! Consider opening a high-yield checking account online and earn 0.50% APY.

Fixed vs Variable Expenses

To review the difference between variable vs. fixed expenses:

•   Fixed expenses are those that cost the same amount each month, like rent or mortgage payments, insurance premiums, and subscription services.

•   Variable expenses are those that fluctuate on a month-to-month basis, like groceries, utilities, restaurant meals, and movie tickets.

•   Both fixed and variable utilities can be either wants or needs — you can have fixed expense wants, like a gym membership, and variable expense needs, like groceries.

When budgeting, whether you are calculating expenses for one person or a family, it’s possible to make cuts on both fixed and variable expenses.

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Ways to Save on Fixed Expenses

Just because an expense is fixed doesn’t mean it can’t be downsized. Consider these possibilities.

Review Where Your Money Is Going

Take a look at your fixed expenses with a critical eye. Did your landlord raise your rent a significant sum? It might be time to look for more affordable options or get a roommate.

Has the number of subscription services you pay for crept up over time? You might save on streaming services by dropping a platform or two.

Refinance Your Loans

Interest rates rise and fall. If they are dropping, you might be able to save money by refinancing your loans, such as your mortgage. Check rates, and see if any offers are available that would reduce your monthly spend.

One option can be to get a lower payment over a longer period. You will likely pay more interest over the life of the loan, but it could help you out if you are living paycheck to paycheck right now.

Consolidate Your Debt

If you have a significant amount of high-interest debt, such as credit card debt, you might consider paying it off with a personal loan that offers a lower interest rate. This could save you money in interest and help lower your fixed expenses.

Bundle Your Insurance

Many insurance companies offer a lower premium if you sign up for both automotive and homeowners insurance with them. Check available offers to potentially reduce your costs.

Ways to Save on Variable Expenses

As you delve into variable vs. fixed expenses, here are some possible ways to minimize the ones that vary.

Scrutinize How You Spend

When you track your spending, you may find ways to cut back. For instance, you could look for ways to do your grocery shopping on a budget by planning meals in advance and shopping with a list. You might be able to challenge yourself to go for one month without, say, takeout food and the next without movies and then put the savings towards paying down debt.

Hit “Pause” on Impulse Purchases

If you feel the urge to buy something that isn’t in your spending plan, try the 30-day rule. Mark down the item and where you saw it and the price in your calendar for 30 days in the future. When that date arrives, if you still feel you must have it, you can find a way to buy it. But there is a very good chance that sense of urgency will have passed.

Try Different Budget Methods

If you find you need more help reining in your variable expenses, you might benefit from trying different budgeting tactics. There is the popular 50/30/20 budget rule, which says to allocate 50% of your take-home pay to needs, 30% to wants, and 20% to savings.

Other people prefer the envelope budget method or using a line-item budget to dig into where their money is going. You might also benefit from apps and digital tools to help you track where your money is going. Many banks offer these to their customers.

Check in With Your Money Regularly

The exact cadence is up to you, but it can be helpful to review your money on a regular basis. Some people like to check in on their account balances a few times a week; others prefer to review their accounts in-depth monthly. Find a system that works for you so you can see if your spending is on-target or going overboard.

Benefits of Saving Money on Fixed Expenses

If you’re trying to find ways to stash some cash, finding places in your budget to make cuts is a big key. And while you can make cuts on both fixed and variable expenses, lowering your fixed expenses can pack a hefty punch, since these tend to be big line items — and since the savings automatically replicate themselves each month when that bill comes due again.

Think about it this way: if you quit your morning latte habit (a variable expense), you might save a grand total of $150 over the course of a month — not too shabby, considering it’s just coffee. Even small savings can add up over time when they’re consistent and effort-free — it’s like automatic savings.

But if you recruit a roommate or move to a less trendy neighborhood, you might slash your rent (a fixed expense) in half. Those are big savings, and savings you don’t have to think about once you’ve made the adjustment: They just rack up each month. The savings you reap can help you pay down debt or save more, which can help you build wealth.

Saving Money on Variable Expenses

Of course, as valuable as it is to make cuts to fixed expenses, saving money on variable expenses is still useful — and depending on your habits, it could be fairly easy to make significant slashes.

As mentioned above, by adjusting your grocery shopping behaviors and aiming at fresh, bulk ingredients over-packaged convenience foods, you might decrease your monthly food bill. You could even get really serious and spend a few hours each weekend scoping out the weekly flyer for sales.

If you have a spendy habit like eating out regularly or shopping for clothes frequently, it can also be possible to find places to make cuts in your variable expenses. You can also find frugal alternatives for your favorite spendy activities, whether that means DIYing your biweekly manicure to learning to whip up that gourmet pizza at home. (Or maybe you’ll find a way to save enough on fixed expenses that you won’t have to worry as much about these habits.)

Test your understanding of what you just read.

Saving and Budgeting With SoFi

Fixed expenses are those costs that are in the same amount each month, whereas variable expenses can vary. Both can be trimmed if you’re trying to save money in your budget, but cutting from fixed expenses can yield bigger savings for less ongoing effort.

Great budgeting starts with a great money management platform — and SoFi can help you with that, thanks to our dashboard and smart features.

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 3.80% APY on SoFi Checking and Savings.

FAQ

What are examples of variable expenses?

Variable expenses are changeable costs that include such items as groceries, utilities, entertainment, dining out, and credit card debt. They differ month by month.

What are examples of fixed expenses?

Fixed expenses are constant month after month. These can include such things as rent, car payments, student loan payments, and subscription services.

Are utilities fixed or variable?

Utilities may be a need vs. a want in life, but they often vary. For instance, if you live in a cold climate, your heating bill will rise in the winter. Or you might run the dishwasher more over the holiday season, increasing your bill.

Photo credit: iStock/LaylaBird

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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.

SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 during a 30-day Evaluation Period (as defined below).

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 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, 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 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY 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, 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 members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://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.

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