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A credit card annual fee is the price that some cardholders pay to use a certain credit card. While there are plenty of credit cards on the market that don’t come with an annual fee, the credit cards that charge an annual fee tend to have better cardholder perks that can outweigh the cost of the annual fee if the card is used optimally.

Keep reading for more insight into annual fee credit cards.

What Is a Credit Card Annual Fee?

Annual fees are costs charged by many (but not all) credit card issuers to help finance their service, including cardholder perks, such as travel credits and free checked luggage on flights.

The amount of an annual fee factors into how much a credit card costs overall, and it varies from card to card. Credit card annual fees can start as low as around $39 and go as high as thousands of dollars for luxury credit cards.

Usually how credit cards work is that cards with sky-high annual fees also offer a lot of extra perks to make the credit card worth the money. For instance, the cardholder may gain exclusive access to airport lounges, credits towards rideshares, or be able to tap into competitive introductory reward bonuses.

However, there are cases where an annual fee is charged for credit cards designed for consumers with low credit scores. These credit cards don’t offer great rewards, and instead give consumers with poor credit a chance to build their credit by using credit cards responsibly. Eventually, the goal is for the cardholder to positively impact their credit so they can qualify for credit cards with lower interest rates and better perks.

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

How Do Credit Card Annual Fees Work?

When you pay the annual fee on a credit card varies depending on your card issuer. Credit card issuers either charge annual fees on either a yearly basis, or they may divide the fee up into smaller monthly installments.

If your fee is charged once a year, then it usually will appear on your first statement after you open your account. You’ll then get charged every 12 months thereafter. In the instance an annual fee is divided into smaller monthly payments, these will get included on the monthly statement the cardholder receives.

You pay your credit card annual fee just like you’d pay any other credit card charges listed on your monthly statement.

Which Credit Cards Typically Have an Annual Fee?

There are three main types of annual fee credit cards you might consider.

Reward Cards

Credit cards that can offer a high-value rewards structure or that have a strong introductory bonus often come with an annual fee. If the card is used strategically, it’s possible to earn enough credit card rewards to cancel out the cost of the annual fee and other cardholder fees. You may earn rewards like cash back, travel points, or discounts on specialty purchases.

Premium Credit Cards

A premium credit card that offers luxe perks like private airport lounge access or a travel concierge is likely to charge an annual fee to use the card. If you’re considering one of these cards, make sure to crunch the numbers to make sure you’ll use enough of the perks to offset the cost of the annual fee.

Secured Credit Cards

A secured credit card is designed to help consumers with bad credit scores build their credit. These cards require a deposit to “secure” the card, and that amount also usually serves as the card’s credit limit. On top of the deposit, secured credit cards often carry an annual fee.

For some, the cost of a secured card may be worth it for the opportunity to build their credit score, which can make it easier to qualify for lending opportunities in the future. Still, make sure it’s within your budget.

Recommended: What Is the Average Credit Card Limit?

How Are Credit Card Annual Fees Charged?

As briefly mentioned above, some credit card issuers charge the annual fee once a year, while others split up the annual fee into smaller monthly installments.

The annual fee shows up on the credit card statement alongside normal credit card charges, and the cardholder pays the annual fee as part of that month’s credit card bill. Remember that even if you have an authorized user on a credit card, it’s still the primary cardholder’s responsibility to make payments, which includes any fees.

Avoiding Credit Card Annual Fees

If you’re trying to avoid credit card fees, it’s entirely possible to avoid paying annual fees. There are plenty of credit cards on the market that don’t charge an annual fee at all.

If someone is interested in a credit card with an annual fee, such as a premium rewards card, they can try to get the first year’s annual fee waived. Some credit card issuers offer to do this from the get-go. However, if someone is an existing cardmember with the issuer and their introductory offer doesn’t include waiving the first year’s fee, they can request a one-time waiver.

Before signing up for a credit card with an annual fee, it’s important to evaluate your spending habits. You want to ensure that you can comfortably afford to cover the annual fee for the credit card. Also investigate whether you’ll earn enough benefits from the card to justify the cost of the annual fee.

The Takeaway

Annual fees are often charged by credit card issuers to cover the cost of their services and perks. Fees can range from around $39 to thousands of dollars for ultra-premium cards, and it can be wise to review them carefully and make sure you are comfortable paying them. It may be possible to avoid these fees by negotiating with your card issuer or qualifying for this reward.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

How do you pay the annual fee on your credit card?

If someone has an annual fee credit card, the annual fee will appear on their credit card statement. The fee may appear every 12 months or in smaller increments on a monthly basis. The cardholder then pays this fee as a part of their monthly bill in addition to any other purchases they made with the credit card during that billing cycle.

How can I avoid paying annual fees on my credit card?

Alongside choosing a credit card that doesn’t charge an annual fee (there are plenty of options on the market), a consumer may be able to get the first year of an annual fee waived as a new cardholder incentive. It only makes sense to open a credit card with an annual fee if the account holder’s spending habits line up with the rewards structure of the credit card. That way, they can earn enough cash back, miles, or other perks to outweigh the cost of the annual fee.

Do all credit cards have annual fees?

There are tons of great credit cards on the market that don’t come with annual fees. There’s never a reason to pay an annual fee if someone decides that’s not a good use of their money.

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

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Budgeting can take some work to get just right. One area that often trips people up is understanding exactly how much they spend each month. Figuring that out can take some trial and error as well as fine-tuning. And even if things are humming along well for a few months, you can suddenly get hit with a surprise bill or a colossal credit card statement that jeopardizes your finances.

To help avoid that scenario and make budgeting easier, it’s important to consider some of the items that are often omitted from the expenses list when people set up budgets. This can help ensure that your hard work managing your finances stays on track.

Read on to learn about commonly overlooked expenditures and how to work them into your budget. That way, you’ll know exactly where your money is going, which can help you avoid debt.

What Are Some Expenses That Are Commonly Budgeted For?

When thinking about a basic living expenses budget, some items are so major, recurring, and important that it would be hard to overlook them. These likely include:

•   Rent or mortgage payments

•   Homeowners association fees

•   Utilities

•   WiFi

•   Cell phone bill

•   Car and/or student loan payments

•   Groceries

•   Daycare or tuition

•   Gym memberships

•   Medical insurance and pet insurance premiums

•   Transportation

Why Is It Important to Budget for Forgotten Expenses?

It’s understandable that some expenses may slip your mind when creating a budget. The typical person probably has dozens of things they are paying for in a given month. But these sneaky forgotten expenses can wreak havoc on your budget and prevent you from reaching your financial goals.

That’s why it’s important to pay close attention to your spending so you can adjust your budget as needed. These are some of the reasons why it’s important to budget for forgotten expenses:

•   Creating a successful budget requires knowing what you spend each month.

•   If you forget to add an expense and run out of funds to pay for it, you may end up pulling funds out of your savings account and sacrificing future goals to cover it.

•   If you really overspend due to forgotten expenses, you may have to turn to high-interest credit card debt to make ends meet.

Recommended: How Much Should I Save a Month?

20 Commonly Forgotten Budget Items

If you are convinced of the importance of accounting for all of your expenses, then it’s time to move ahead. Let’s look at some commonly forgotten budget items to make sure they don’t fall through the cracks.

1. Home Maintenance

While it’s hard to forget about your mortgage payments, the other expenses of homeownership are easy to forget about and add up fast. From hiring a gardener to regular carpet cleanings to random handyman repairs, it makes sense to leave room in a budget for home maintenance as those charges tend to frequently pop up.

2. Vehicle Maintenance

Budgeting for a car payment is probably top of mind, since you likely don’t want to risk getting hit with late payment fees or losing your car. The same generally holds true for car insurance. But those aren’t the only car expenses worth planning for. Drivers also need to make room in their budget for such car-related expenses as tune-ups and repairs. You’ll also want to remember to include gas, insurance, parking and toll road fees; they also have a way of adding up.

3. Taxes

Income taxes may be withdrawn from your paychecks, but property taxes generally aren’t. Forgetting about these bills is a common budgeting mistake. Then, when the payment does come due, it’s a nasty surprise that can throw your budget out of whack.

4. Medical Expenses

It’s easy to forget about or overlook your medical expenses, including over-the-counter and Rx drugs, dental cleanings, regular checkups, or getting new glasses or contacts. These are all vital expenses worth planning for. Budgeting for medical expenses can help improve your financial health too by helping you avoid debt.

5. Donations/Giving

Perhaps you donate when you see a worthy cause on social media or sponsor a colleague who’s doing a charity walk. This kind of spending is easy to forget about, so make sure to put it into your budget so you don’t wind up short of funds when you want to help others.

Recommended: 15 Creative Ways to Save Money

6. Office/School Supplies

Items that keep your home office or study space up and running need a spot in your budget too. This means accounting for things like toner, paper, stamps, shipping supplies, and software subscription fees.

7. Renewals for Licenses (Insurance, Drivers, Etc.)

Some expenses only pop up once a year, or every few years, like driver’s license or insurance renewals, but it can be helpful to split up that expense into smaller chunks and save for it month by month.

8. Seasonal Maintenance

Some home-maintenance needs are ongoing, but others come around seasonally. Similar to license renewals, it can be helpful to save up for pricey seasonal maintenance needs, like gutter cleaning and snow removal, all year round. That way, you won’t come up short when a bill hits.

9. Items for Pets

Pets bring a lot of love into a home, but also a lot of expenses. From vet fees and pet insurance to toys, food, and doggie daycare, these expenses can be significant and deserve a place in your budget.

10. Personal Items (Hair, Nails, Etc.)

A bottle of shampoo here, a manicure there, plus regular haircuts — the myriad expenses that help us look and feel our best can add up quickly. They may only cost a few bucks a pop (hello, body wash) or only happen once in a while (that fresh set of highlights), but it’s wise to be prepared for the cost.

11. Lump Sum Bills

Some memberships and insurance plans may only renew once or twice a year. Many of them are lump sum bills, meaning you are expected to pay them in full, right away. Which is why it can be helpful to save money each month to make sure you have the funds to cover lump sum bills.

Recommended: 18 Common Misconceptions About Money

12. Ridesharing

If you rely on ridesharing apps to get around (whether it’s once a month or several times a week), it’s important to budget for that expense. The convenience can make it feel like a free ride…but it isn’t!

13. Delivery App Fees

Another app-based expense to look out for are the delivery fees that get added when you order dinner or groceries from the comfort of your home. Also, if you tip the driver, make sure to include that as well. These fees definitely add to the price of what’s being dropped off.

14. Business Expenses (Conferences, Trips, Etc.)

You may incur expenses related to work that aren’t reimbursed by your employer. These include such purchases as buying professional clothing, renewing professional licenses, or pursuing continuing education to further your career.

15. Entertainment

From travel to movies and concerts to museum memberships, there’s no shortage of entertainment costs that need to make their way into our budgets.

Recommended: Are You Bad with Money? Here’s How to Get Better

16. Subscriptions or Membership Fees

Speaking of entertainment, you may be paying for one or more streaming platforms, like Netflix, HBO Max, and Hulu. And you may have other subscriptions, like meal kits, personal-care supplies, gym memberships, or even a wine- or beer-of-the-month club. These kinds of one-click sign-ups may not make it onto your budget, but they should.

17. Gifts for Others

From swanky birthday dinners to holiday gifts to wedding presents, you may spend a chunk of change every year to make others happy. It can help to save for the costs of gifts all year round. You can do this by estimating how much you expect to spend in this category for the year and then break it down into a monthly expense by adding a “presents” line to your budget. That way, when these expenses do pop up, you’ll be prepared.

18. Coffee

There’s nothing wrong with enjoying a pricey latte on the go now and then, as long as it finds a spot in your budget. These kinds of little treats can be an important part of self-care, and budgeting for them properly can be an example of financial self-care.

19. Roadside Assistance Costs

One extra that some drivers may find very worthwhile is roadside assistance service. Keep it in the budget, and stay safe.

20. Laundromat/Dry Cleaners

Whether you drop off your clothing at a laundromat once a week and have them washed and folded for you, or you DIY but occasionally drop clothing off at the dry cleaner, these are all costs that need to be considered in your monthly budget.

Why Are These Expenses Commonly Forgotten?

As you can see, the list of commonly forgotten monthly expenses is long. One key reason is that it’s relatively simple to remember to add the really big, recurring expenses — like rent or a car payment — into a monthly budget. But there are plenty of “invisible” expenses that we pay for with a simple click online (whether that means paying for a subscription service or a life insurance policy) that just don’t come to mind when setting up a budget.

There are also those very infrequent charges — say, an annual technician visit to clean your heating system — that we can overlook until they hit. It’s also easy to overlook small but relatively frequent purchases, such as laundry detergent or printer paper, that can add up over time.

Accounting for as many expenditures as possible will help you hone your budget and be as prepared as possible for the bills that come your way.

Banking With SoFi

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

What are common monthly expenses?

Common monthly expenses include rent or mortgage payments, utilities, food, cell phone bills, and loans or credit-card payments. Many of us also purchase clothes, meals/beverages away from home, personal care products, medical insurance, and have transportation expenses, which may or may not include car payments and insurance.

What are some hidden expenses you may have?

Some commonly forgotten budget items can include medical expenses, petcare costs, charitable donations, home- and car-maintenance charges, and subscription services, whether that’s a gym membership or streaming channels.

Will my budget be messed up if I do not add these forgotten expenses?

Yes, it’s possible to mess up a budget if you don’t include all of your expenses. You may wind up with bills to pay and not enough income to cover them. To resolve this, you might have to dip into your savings or start putting things on your credit card, neither of which is ideal. The good news is, each month offers a fresh start to make your budget work better.

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

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

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

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

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

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

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

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Saving money is a good thing, but it’s important to find the right kind of account for your cash. Both savings accounts and certificates of deposit (CDs) can be a safe spot to keep your money, but they have differences. A savings account can be more accessible, meaning you can typically withdraw funds at will, while with a CD, you are supposed to let your money sit for an agreed-upon period of time. Also, interest rates may vary. CDs typically offer higher rates than traditional savings accounts do. However, high-yield savings accounts may offer rates close to (or possibly even exceeding) those of CDs.

Depending on your needs and preferences, you may discover that one option is a better fit for you. Read on for details on what these accounts offer and how they differ. Once you know the pros and cons of each, you will likely be better prepared to make a decision.

Certificate of Deposit (CD) vs HYSA Savings Accounts

A certificate of deposit (CD) and savings account are both vehicles that can help you grow your money thanks to interest earned. A key difference, however, is that a savings account is more accessible, while, with a CD, you agree to keep the funds on deposit for a period of time. You may, however, be rewarded with a higher interest rate for doing so.

That said, high-yield savings accounts can offer competitive interest rates vs. CDs and provide more flexibility. You can withdraw funds as needed, without being hit with penalties.

To understand more about the difference between a CD and a savings account, it’s a good idea to first learn in depth how each type of account works.

What Is a Certificate of Deposit (CD)?

A certificate of deposit (CD) is a specific type of savings account that pays interest. You agree to keep the money on deposit for a specific term, which can range from a few months to several years, and you are promised a specific interest rate (usually, but not always, a fixed rate). CDs are also known as time deposits for this reason. A couple of points to note:

•   Generally, the longer the term you choose, the higher the interest rate may be. You may also find a promotional CD with a higher than usual rate.

•   You may find some variable-rate CDs offered. With these, the interest can fluctuate with the market.

•   Typically, you will pay a penalty if you withdraw funds before the end of the term. There are some no penalty CDs on the market that don’t involve a penalty for pulling money out early. They may, however, offer lower interest rates.

CDs are considered to be a very safe savings option, provided they are held at a bank with Federal Deposit Insurance Corporation (FDIC) insurance. If so, you will be covered up to $250,000 per depositor, per account category, per insured institution. That means even in the very rare instance of the bank failing, you wouldn’t lose funds up to that amount. (If you open a CD at a credit union, you would likely be insured by the National Credit Union Administration, or NCUA, in a similar way.)

How Does a CD Work?

Here’s how a certificate of deposit works:

•   When you open a CD, you typically commit to leaving the money in the account for a set period of time such as six months or three years. In exchange for locking up your funds in this way, the bank issuing the CD will pay out a certain amount of interest.

•   Many financial institutions give account holders the option to collect interest at intervals during the term of the CD or at the end of the term.

•   However, if you withdraw funds from the CD before its term is over (also known as its maturation date), you will likely be charged a penalty.

•   When the agreed upon period of time is over, you can get your original deposit back, along with the interest earned and not yet paid out, or you can roll it over into a new CD.

What Is an HYSA Savings Account?

A savings account, which you can open at a bank, credit union, or other financial institution, is a place where you can save money without locking it away for an extended period of time. Opt for a high-yield savings account to help your money grow even faster.

•   A savings account is a good fit for money you want to protect and grow while still being able to access it — say, for an emergency fund or a down payment for a car you plan to buy in the coming months.

•   The funds in your account are accessible when you want them, without a penalty, though some financial institutions do limit the number of transactions per month.

•   Similar to CDs, savings accounts generate interest, but traditional savings accounts may offer a lower rate. A high-yield savings account, or HYSA (most often found at online banks), can come with a higher interest rate, sometimes a multiple of what traditional accounts offer. For example, as of September 2024, the average interest rate for traditional savings accounts was 0.46% and the rate for high-yield savings accounts could be several times that.

Most savings accounts at major banks offer FDIC insurance. If the savings account is held at a credit union instead of a bank, then the NCUA vs FDIC insures the money with similar guidelines.

How Does an HYSA Savings Account Work?

High-yield savings accounts, like traditional savings accounts, work by putting money in your account, where it earns interest. You can then withdraw funds as needed (though some financial institutions may put a limit on how many transactions they allow per month). The difference is, however, that you’ll earn a more robust interest rate.

Someone might put money in savings to:

•   Earn interest and help their money grow

•   Save money for a short-term financial goal

•   Create an emergency fund

•   Keep their money safe vs. having cash at home

•   Separate the money they want to save from the money they want to spend

Recommended: Savings Account Calculator

3 Similarities Between a CD and HYSA Savings Account

If you’ve ever thought of a CD and a savings account being almost the same thing, there’s a good reason why: There are a few similarities between them.

1. Insured

Typically, a CD or savings account is insured by either the FDIC or the National Credit Union Administration (NCUA) which helps protect the money in these savings vehicles.

2. Earns Interest

Both CDs and savings accounts earn interest on the money deposited into them, unlike checking accounts which often offer no interest. While CDs may earn a higher interest rate than traditional savings accounts, a HYSA may offer a competitive interest rate vs. a CD, but it won’t charge you an early-withdrawal penalty.

3. Good Ways to Save Money

You know the saying: Out of sight, out of mind. By putting money into a CD or savings account, you may find it easier to save money and resist the temptation to spend it.

Differences Between a CD and HYSA Savings Account/2>

Of course, there are some key differences between these accounts worth understanding. Knowing these points could help you decide between a high-yield savings account vs. a CD.

1. Accessibility

With a CD, you can’t remove your money until the date of maturity without being penalized. With a high-yield savings account and traditional ones as well, you can usually make either up to six withdrawals a month or unlimited withdrawals. (Check with your financial institution for specifics.)

2. Amount of Interest Earned

Traditional savings accounts generally earn less interest than CDs. However, a high-yield savings account may offer a rate that’s competitive with a CD. Comparison-shop to see what’s offered.

When to Use a CD Instead of an HYSA Savings Account

Here’s some guidance on when you might opt for a CD vs. a savings account.

•   A CD is a good fit if you don’t need to access your money in the near future. If you can agree to leave the money untouched for a number of months or years in a CD, you could earn a higher interest rate vs. a savings account.

For instance, say you got a bonus at work and aren’t quite sure what you want to do with it. Putting it in a CD will keep it safe and earning interest while you decide how you might want to use it.

•   Another scenario in which a CD could be a wise move is if interest rates are expected to fall. Locking in your rate with a CD before that happens could help your money grow.

When to Use an HYSA Savings Account Instead of a CD

A savings account can be a better option if you need your money to be easily accessible in the near future.

•   A savings account can be a good place to store an emergency fund (since you never know when you might need to withdraw some funds) or when saving up for a short-term financial goal.

•   Putting money in a savings account can be a wise move if interest rates are expected to rise. That way, you can enjoy higher earnings as rates climb. That wouldn’t be the case if you locked in to a fixed-rate CD.

How to Open a CD

To open a CD, you can choose a financial institution, and pick the type and term of CD you want. This can mean deciding between a no-penalty or traditional CD. You’ll also determine how often you want to collect your interest payments (say, monthly or when the CD matures, meaning when it reaches the end of its term).

You can likely open a CD in person or online. The process also typically involves sharing your government-issued photo ID, personal details (name, address, Social Security number, and so forth), and other credentials.

The final step will be to fund the CD: That happens by transferring the money online, via a phone transfer, handing over cash if you’re at a branch, or by using a check.

How to Open an HYSA Savings Account

The first step for opening a savings account, including a high-interest savings account, is to compare financial institutions and account options and make your decision.

You may find options depending on minimum opening deposits and minimum balances; interest rates will likely vary between standard and high-yield accounts. You may also find a variety of fees relating to the accounts available, so consider how those might impact your savings.

Next, you will likely have to provide personal information (such as name, address, and SSN), government-issued photo ID, and other details in order to complete the process. This holds true whether you are opening an account in person at a brick-and-mortar location or online.

Lastly, you’ll need to add cash to open the account, whether by handing over money in person or otherwise transferring funds. A typical deposit requirement for a basic savings account might be $25 to $100; you might find some that don’t need any deposit. For a HYSA, you could see minimums ranging from similar levels to thousands of dollars in some cases.

Recommended: Different Types of High-Interest Accounts to Know

The Takeaway

Both certificates of deposit and savings accounts are secure, low-risk places to keep money and earn interest. With a CD, you may earn higher interest than with a standard savings account, but you agree to keep your money on deposit for a specific term or else be penalized for an early withdrawal. With a savings account, your funds are accessible without that kind of penalty, so you can dip in as needed. With a high-yield savings account, you might earn as high an interest rate as a CD. Which financial product is the right choice will depend on your particular needs and goals.

If a savings account seems like a good option to you, SoFi might be the right bank.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

Is a certificate of deposit the same as a savings account?

No, a certificate of deposit (CD) is not the same thing as a savings account. Money placed in a CD is not easily accessible like a savings account; you agree not to touch it for a period of time, usually from six months to a few years. CDs are also known as term deposits.

Is a high-yield savings or CD account better?

Whether a high-yield savings account or CD is better for you depends on your unique financial needs. If you have money you don’t need to access anytime soon and can find a higher interest rate for a CD vs. a savings account, then a CD is likely a better fit. If, however, you need to be able to access your money and make withdrawals, a savings account will probably better suit you. And you might find a HYSA that has a rate that’s as good as a CD’s.

Does a certificate of deposit give you better interest than a savings account?

In general, a CD can provide a better interest rate than a traditional savings account, but it pays to research exactly what is being offered. It’s possible that a CD’s interest rate might not be high enough to outweigh the downside of not being able to access your funds the way you can with a savings account. Or you might find that a high-yield savings account offers an interest rate on a par with that of a CD, plus greater accessibility.

Is a certificate of deposit safer than a savings account?

CDs and savings accounts can be equally safe. Most major banks and credit unions are insured by either the FDIC or NCUA, protecting consumers in the very unlikely event of the financial institution

What is the biggest negative of putting your money in a CD?

The biggest negative of a CD is lack of access. You are locking up your money for a set period of time, or term. If you withdraw funds before the CD’s term of deposit is up, you typically face financial penalties.

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

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

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

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

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

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