Apr
27
2023

Five Strategies for Overcoming Your Money Fears

By | Budgeting & Goals, Financial Independence, money | Comments Off on Five Strategies for Overcoming Your Money Fears

Many of us are worried about money. According to a 2022 study, 66% of people said their finances are a major source of stress. Of that group, 57% worry about having the money to pay for their rent, bills, and food. And 43% are afraid they might not be able to save enough for the future.

But you don’t have to let your money fears control the way you save or spend. In fact, you can learn to face these fears head on, which could help you conquer them.

Here are five common fears about finances, and potential ways to overcome them.

Drowning in Debt

American household debt hit $16.90 trillion at the end of 2022, according to the Federal Reserve Bank of New York. And while that number is scary, also frightening are the interest and late payment charges you might accrue if you don’t pay off your debt.

While you might be tempted to avoid thinking about your student loans or credit card debt, they’ll still be there month after month. What’s worse, neglecting debt can adversely affect your credit score, haunting you long after that late credit card payment is resolved.

Exploring Debt Repayment

Instead of ruminating, it’s best to take action. These are a few strategies for debt repayment you may want to consider:

•   Avalanche or snowball method. The avalanche method to pay off debt involves making minimum payments on all your debts while putting as much extra money you have, like your tax refund, toward tackling the debt with the highest interest rate. Once that debt is paid off, you use the same strategy on the debt with the next highest interest, and so on.

The snowball method uses a behavioral approach. You pay off the smallest debts first, while continuing to make the minimum payments on all your other debts. Once you pay off the first debt, it may give you the confidence and motivation to approach the more daunting ones.

Regardless of which strategy you use, adopting a plan to pay down your debt can give you a clear course of action, outweighing monthly dread when payments come due.

•   Consider a personal loan. If credit card debt has you overwhelmed, you might consider taking out a personal loan to consolidate debt from multiple credit cards into a single monthly payment. This could even lower your interest rate, which could also decrease your stress.

•   Ask for a lower APR. Sometimes, simply asking for help can bring relief. If you’re struggling with credit card debt, call the financial institution or credit card company and request a lower APR (annual percentage rate). If they agree, it would mean lower interest on the debt you carry, which could get you debt-free faster.

Unemployment

If you don’t feel solid financially, worrying about your job can cause major stress. The fear of losing your paycheck could even lead to ignoring your savings account balance.
Instead of avoidance, work on giving yourself a financial cushion. Preparing for the worst could offer relief.

Face Your Fear: Building an Emergency Fund

Establishing an emergency fund can be a good place to start. Setting aside even a small amount of money each month can create a sense of security — and accomplishment.

Many experts recommend putting away three to six months worth of living expenses. But you can start smaller than that, if necessary, and work your way up.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.00% APY on savings balances.

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Preparing for Retirement

With monthly bills looming, it can be difficult to think ahead for the long-term. Retirement seems far away, while your rent is due right now.

Understanding retirement funds may be intimidating, but opening an account may be easier than you think. And saving for your future is undeniably important.

Face Your Fear: Filling Your 401(k) or IRA

If you haven’t started saving for retirement, don’t beat yourself up. Direct your energy toward saving what you can each month, no matter how small.

See if your employer offers a 401(k), and sign up for it. Or consider opening an IRA. Though it may feel insignificant, putting away even a small sum each month may make a large difference over time.

Fear of Spending Money

Anxiety around spending may make some people fret over the smallest purchases. If you fear overspending, a dinner out could lead to cold sweats as you calculate the cheapest menu item. Or it might keep you from going out altogether.

Face Your Fear: Sticking to a Budget

Knowledge is power. By creating a budget, you can alleviate the stress that comes with everyday purchases.

Knowing exactly how much money enters and leaves your account each month can be empowering. With an automated app like SoFi, you can track all your spending in one place.

It’s Too Late

You might think you’re too far along in your career to start saving for retirement, or too busy to keep up with an emergency fund. Finances, especially when you’re afraid, can seem complicated, intimidating, or overwhelming.

Face Your Fear: Getting a Fresh Look at Your Finances

Sometimes just pushing yourself to start is all you need. It’s never too late to adopt good personal finance habits like paying off debt, budgeting, and saving.

While you’re at it, consider an easier way to earn while you’re saving, such as opening a high-yield online bank account, so that your money might grow even faster.

The Takeaway

Worrying about money is common for many people, but it’s possible to overcome your fears. Paying down debt, setting up an emergency fund, contributing to a retirement fund, and putting money into a bank account where it can earn interest, could help you take charge of your situation — and your future.

If you’re ready to open a new bank account, SoFi Checking and Savings® has a competitive APY and no account fees. It’s convenient, too, since you can save and pay your bills all in one place.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

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

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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. ©2024 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 direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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Apr
24
2023
25 Ways to Cut Costs on a Road Trip_780x440

25 Ways to Cut Costs on a Road Trip

By | Budgeting & Goals, Financial Independence, money | Comments Off on 25 Ways to Cut Costs on a Road Trip

Summer is full of simple pleasures: baseball games, barbecues, beach reads, and that great American classic, the road trip. Whether you are heading to a national park or a local lake, on a wine-tasting getaway, an antiquing jaunt, or just to hang with your college roommate, a road trip can be exciting, easily wrangled, and spontaneous.

But if you’re wondering how to save money on a road trip, a little bit of planning can go a long way to keep costs under control.

Learn how to minimize expenses when you head out on a summer road trip, from deciding which vehicle to use, where to get gas, how to eat on the road, and more. Here, 25 easy ideas for road tripping on the cheap.

1. Choose a Fuel-Efficient Car

If you have a choice of cars to take, you may want to go with one that is large enough to be comfortable but also gives you the best gas mileage. This is true whether you are using your own wheels or renting a car.

You can use FuelEconomy.gov’s Trip Calculator to determine which car will cost you the least in gas. This tool helps estimate fuel consumption and how much it will cost for a particular route using a specific car.

2. Drive at or Below the Speed Limit

This cautionary measure can help you save money in two ways. For one, you’ll be less likely to get pulled over and slapped with an expensive speeding ticket.

For another, observing the speed limit can actually reduce your gas consumption. In fact, according to the U.S. Department of Energy, you can save 18 cents a gallon on highways for every five miles per hour you slow down.

3. Pack Your Car Wisely

You can also cut your gas costs by placing items inside the car or trunk rather than piling them on your roof. By reducing drag, this tactic can increase your fuel economy by as much as 25% on highways according to one benchmark study.

If you’re out of room in the car, using a rear-mounted cargo box or tray instead of a roof rack can improve your fuel economy by up to 9%.

4. Set a Road Trip Budget

When you first start talking about the road trip, you may want to roughly map out where you want to go, how long it’ll take to get there, and if you’ll need hotels or motels. From there, you can calculate the approximate cost of gas (FuelEconomy.gov can help) and tolls (try Tollsmart ), as well as food and fun.

Once you’ve established an overall budget for the trip, you start creating a travel fund.

5. Bring Your Own Food and Supplies

Packing a cooler with water bottles, drinks, hand-held snacks, and sandwiches before leaving home is a proven frugal traveler trick. You can end up saving a sizable chunk of cash by not having to buy drinks and snacks at rest stops, vending machines, and drive-throughs.

You’ll also have a quick solution the next time someone in the car wants to pull over because they’re hungry.

6. Sign up for an Electronic Toll Account

Depending on which state(s) you are traveling through, you may be able to save a fair amount of money on tolls by getting the region-appropriate quick pass (or transponder) for your car. In New York, for example, drivers with EZ-Pass can save about 30% on tolls.

7. Avoid Tolls Altogether

When your road trip isn’t on any set schedule, you may want to take the scenic route and completely avoid tolls. You can do this by setting your GPS app to “avoid tolls.”

If you’re in a location with pricey bridges and highways, your savings could really add up. You may want to make sure, however, that avoiding tolls doesn’t take you so far out of your way that you’re spending a lot more on gas.

8. Look for Hotels that Offer Free Breakfasts

If you’re comparing lodging options in a similar price and quality range, one way to save on hotel costs and on road trip expenses in general is to choose the hotel with a free breakfast.

Not only will you probably get a large, filling meal, but you might even be able to take a piece of fruit or cereal box as a snack for later on in the trip.

9. Pack Reusable Water Bottles for Everyone

You’ll no doubt get thirsty while driving and sightseeing, especially in summer, and buying water or drinks can put a major dent in your road trip budget.

Making sure everyone in the car has a large reusable water bottle (or two) to fill up at rest stops and in restaurants can help you avoid spending money on drinks, and also create less plastic waste.

10. Buy a National Park Pass

If you’re going to be road-tripping across the U.S. and visiting a few national parks, you may want to consider getting an America the Beautiful pass.

The pass (which costs $80 per year and $20 for seniors) covers entrance, standard amenity, and day use fees for a driver and all passengers in a personal vehicle (up to 4 adults) at more than 2,000 federal recreation sites.

Just remember that summer is primetime for many parks, from Yosemite in California to Acadia in Maine. If you need lodging, book early.

11. Hit the Grocery Store

Once you’ve run out of your cooler meals and snacks, consider re-stocking at a local grocery store while en route so you don’t have to resort to fast food or a pricey local restaurant for the rest of your trip.

This is also a good strategy if you’re going to be staying at a hotel for a few nights. Making good use of a hotel kitchenette and fridge can help you avoid having to eat out for every single meal.

12. Pre-Book Your Hotels

Spontaneity is great, but if you’re looking to save money on accommodations, it can be wiser to book ahead of time and stick to your plan. You can often secure a better rate by booking in advance (and online), than by showing up without a reservation or booking last minute.

13. Look Beyond Hotels

Your first thought when looking for roadside accommodation may be cheap hotels or motels. But you sometimes find a better deal (or a nicer option for the same price) using a home rental site, such as Airbnb, VRBO, or FlipKey, especially if you’re staying for more than one night.

When booking lodging, it can be smart to use a travel credit card or a cash back rewards credit card, since every swipe can help you earn points, miles, or cash back that you might apply to future trips.

14. Plan to Visit Free Attractions

Part of the fun of a road trip is to enjoy the journey and scenery while en route to your final destination.

As you travel (or before you go), you may want to research free attractions, such as a hike, walk on a beach, or a free museum, on your route for times when you need to stretch and take a driving break.

You can also look for festivals and local events by checking out the online events calendar for the towns you’ll be visiting that day. You might also check out Meetup.com and see what kinds of local groups are gathering for experiences and outings.

15. Plan Gas Stops in Advance

Getting stuck in a big city with the tank close to empty can be costly (and driving in circles looking for a gas station when you’re en route to the beach is no fun either). To avoid overpriced gas, you may want to use a gas app like Gas Guru or GasBuddy, which can help you compare prices and find affordable gas no matter where you are. This hack is an easy way to lower your gas costs.

16. Set a Daily Spending Limit

You can use your overall budget to get a rough idea of how much you can spend on the road trip each day. This can help you avoid blowing the money you’ve saved, wherever you may keep your travel fund, before the end of the trip.

A spending plan can also let you know when you can splurge a bit and when you’ll have to reign it in with a meal, activity, or lodging. You may also want to set aside some of your budget for the unexpected, such as the car getting a flat and needing to be towed, or discovering the cheap hotel you planned to stay in is actually a total dump. Also factor in some summer road-trip treats: You’re likely to be stopping for ice cream here and there and maybe even a lobster roll.

17. Entertain the Kids on the Cheap

Road trips can help you afford a family vacation since you sidestep pricey plane tickets. But remember that kids have a tendency to get bored, tired, and antsy on a road trip. To avoid giving in to impulse toy purchases, you may want to bring along their favorite toys and also pick up a variety of new ones at the dollar store before you leave.

Good choices include coloring books and games they can play in the car that won’t create a mess. You might also consider borrowing audio books or DVDs from the library to give yourself an hour or so of peace and quiet.

18. Search Online for Local Coupons and Passes

It can be worthwhile to research online coupons and discount codes for local attractions and restaurants at some of your scheduled stops.

Consider checking Groupon or LivingSocial for deals and steals. Sometimes booking online ahead of time saves you money, and it’ll give you a reason to try to reach a specific destination by a certain day.

19. Save on Alcohol

Sipping a cold beer or glass of wine at a local bar at the end of your long drive might sound like the perfect way to unwind.

But alcohol costs can quickly add up on a road trip vacation. Consider buying a few local beers or a small bottle of wine that’s native to that area to enjoy in your hotel room. You’ll save money on tipping too.

20. Volunteer at a Festival

Yes, you read that correctly. Some festivals and special events offer discounts or free admission to volunteers. You can look up events taking place in the town you’ll be visiting and reach out to the event organizer to see if they need help. Summer is full of events like these, from concerts to craft fairs to food festivals.

21. Sign up for a AAA Membership

An auto club like AAA can save you time, money, and hassle should you run into car trouble during your trip. What’s more, a membership (often starting at around $5 a month) gives you access to discounts at loads of hotels, restaurants, and many retailers nationwide.

22. Travel During the Off-Season

Yes, summer can be the most welcoming time of the year to hop behind the wheel. But visiting national parks when kids are back in school can often help save money on lodging and activities. Planning a road trip to a destination like Disney World or Disneyland? You’ll likely find better deals if it’s not during a spring break or other school vacation.

You can often also save money by visiting warm weather locations during “shoulder seasons.” This is the period in between a destination’s low and high seasons of tourism, when prices for hotels tend to be lower, and crowds tend to be smaller, at popular attractions.

23. Do Some Camping

Outdoorsy road trippers might enjoy setting up a tent at a free or low-cost public campsite. You can find out more on the Bureau of Land Management site.

This can end up saving you a lot of money on hotel costs, provided you don’t go out and buy a lot of expensive camping equipment.

If you don’t have any camping gear, you may want to consider renting equipment from an outdoor specialty store or asking a friend who regularly goes camping if you can borrow their equipment. As noted above, summer can be prime time for basking in some of America’s natural beauty, so book your campsite early.

24. Eat Out for Lunch Instead of Dinner

If there are special restaurants you want to try without breaking the bank, consider going there for lunch. You might get a slightly smaller portion than you would if you ordered it off the dinner menu, but the price will likely be more affordable.

25. Take Advantage of Loyalty Programs

Booking with the same hotel chain as often as possible and signing up for their member loyalty (or “points”) program may net you a free night after a few stays.

Travel booking services, such as Expedia, Travelocity, or Hotels.com, may also offer discounted rates and free nights for loyal customers.

Recommended: Getting the Most Out of Credit Card Rewards

The Takeaway

Planning a summer vacation? A car trip might sound much more affordable than traveling by plane. However, gas, food, and accommodations can add up.

One of the best ways to cut road trip expenses is to plan out your trip and research deals, coupons, and discounts ahead of time. Packing wisely and loading up on drinks, snacks, toys, and activities can also help cut costs once you’re out on the road.

Ready to start planning and saving for your next road trip? Consider signing up for a SoFi Checking and Savings® account.

SoFi Checking and Savings has a special “vaults” feature that allows you to separate your savings from your spending, while earning competitive annual percentage yield (APY) on all of your money and paying no account fees. You can even set up a separate vault for your travel fund.

SoFi Checking and Savings: The smart, simple way to save for your next trip.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 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 direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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

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

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Apr
14
2023
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Alternatives to Banks and Traditional Savings Accounts

By | Budgeting & Goals, Financial Independence | Comments Off on Alternatives to Banks and Traditional Savings Accounts

Increasingly, there are more and more alternatives to traditional banks and savings accounts. From fintech to mobile banking and money market funds to cash management accounts, you’ll have plenty of options to consider in the changing world of personal finance. Here’s a look at:

•  Alternative banking options, including money market accounts, cash management accounts, and more

•  The pros and cons of mobile banking

•  Credit unions vs. P2P lending vs. traditional banks.

Alternative Banking Options

Aside from the old-school savings and checking options offered at traditional banks, there are other options that allow you to save and withdraw cash.

Money Market Accounts

Money market accounts (MMAs), also known as money market deposit accounts (MMDAs), are a type of interest-bearing savings vehicle that was developed several decades ago. In general, these accounts offer relatively lower risk for investors than other types of investments because they are insured by the Federal Deposit Insurance Corporation. These accounts would typically offer higher interest rates than traditional savings accounts because the funds can be invested into government securities, certificates of deposit (CDs), and other vehicles. However, in today’s market, the gap is often not so great.

These accounts often combine features of a savings account and a checking account. For instance, if you are an account holder, you may or may not be limited to the number of monthly withdrawals you can make, which is standard with some savings accounts. However, you may also have a debit card, as you would with a checking account, to make transactions more seamless.

It’s worth noting that, even though they may sound alike, money market accounts and money market funds (a type of investment) are very different financial products.

Cash Management Accounts

A cash management account (or CMA) combines traits of a savings account with a checking account, allowing account holders to both save and spend. These accounts are typically offered by non-bank fintechs, such as online investment firms or robo-advisors. Rates can be competitive while allowing the account holder to make withdrawals as needed. This is in contrast to the types of accounts that limit transactions allowed per statement cycle.

Sometimes, checks are provided with cash management accounts. They may also come with debit cards and access to ATMs.

The funds are typically dispersed into accounts at banks where FDIC insurance keeps the money safe.

Alternative Options vs Traditional Savings Accounts

Here’s a quick look at how money market accounts and cash management accounts differ from traditional savings accounts.

Note: As you review these options, if you are interested in higher insurance limits, it’s worthwhile to note that some banks participate in programs that extend the FDIC insurance to cover millions.1

Money Market Account Cash Management Account Traditional Savings Account
May offer higher interest rates than traditional savings accounts. Often offered by non-bank financial service providers. They combine the attributes of traditional checking and savings accounts, offering competitive interest rates. Typically offered by traditional banks, traditional savings accounts may offer lower interest rates than money market accounts and cash management accounts.
May allow limited withdrawals each month using check or debit card. Users can make withdrawals as needed. Checks may be provided. Federal rules once limited withdrawals and transfers out of the account to six per month. That regulation has been suspended in response to the COVID-19 pandemic, though banks may still adhere to it.
Can be invested by the bank in government securities, certificates of deposit, and commercial paper, all of which are considered relatively low risk investments. Does not allow investing. Does not allow investing.
Money market accounts are FDIC insured up to $250,000. FDIC insured up to $250,000. FDIC insured up to $250,000.

Fintech

Fintech is short for “financial technology,” a term used to describe financial services with essential, integrated technology. Some forms have become so commonplace that users don’t necessarily even consider them as fintech. An example would be using a mobile payment app. When considering fintech vs traditional banking there may be other products that are more clearly alternative banking solutions. An example of this could be buying and selling cryptocurrency.

Besides mobile apps and cryptocurrency, other fintech examples may include:

•  Digital-only banks, meaning ones without brick-and-mortar branches

•  Artificial intelligence (AI), such as those used in chatbots to answer customer questions and with robo-advisors to help with investing

•  Biometric technologies that make it easier to log into apps while also providing additional security.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.00% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


Pros and Cons of Mobile Banking

Most traditional banks and credit unions offer mobile banking today as part of their services. Basically, mobile banking allows customers to check their balances and transactions online, deposit checks on their phones, and transfer funds digitally.

Because online-only banks typically don’t have physical branches, overhead costs can be lower for them. They may then pass those savings onto their customers, as well as often provide perks beyond those provided in a traditional bank. Here’s a look at some of the pros and cons of online banking:

Pros Cons
Higher interest rates: Reduced overhead can help online-only banks to provide more attractive interest rates. Lack of live assistance: Online-only banks commonly have a customer service line without offering personal banking services. This means that a customer will need to set up accounts and apply for loans without the ability to talk through any challenges with a banker.
No minimum balance: Traditional banks often require minimum balances in accounts, while many online-only institutions do not. Limited services: To help keep costs low and be able to provide higher interest rates, an online-only bank will often offer fewer services than traditional banks.
Convenience: Mobile banking institutions are open 24/7/365. All a customer needs is internet access. Limited ATM access: It may be more difficult to find ATMs within the network
ATM availability: Online-only banks often participate in ATM networks so that customers can use them at no cost. Or, online-only banks may instead refund ATM fees for a certain number of withdrawals.

Consumers who bank online should take appropriate precautions to avoid fraudulent activity. Online banking is very safe, but nothing is completely without issues in this era of hackers and scammers. Wise moves include not accessing private information on public Wi-Fi, not checking banking information on public computers, and using debit cards on protected sites only. These steps may help to reduce the odds of security-related problems with online banking.

Recommended: Is Mobile Banking Safe?

Credit Unions vs. Traditional Banks

When you’re looking for a place to open a checking or savings account or find loan products like a mortgage, credit unions can be an alternative to traditional banks. Here’s a look at how the two options compare:

Traditional Bank Credit Union
Banks are for-profit institutions that are owned privately or are publicly traded companies. Credit unions are nonprofits typically owned by its members.
Banking services are typically available to anyone with a good financial track record. Services may only be available to members or family members of the community that the credit union serves.
Banks may have more branches and ATMs available. Credit unions often partner with other institutions to make more bricks-and-mortar branches available and to increase the size of their ATM network.
Banks may offer a wider array of options for banking products. Other products, such as credit cards, may offer more perks. Credit unions often offer enhanced customer services and may be cheaper to use than traditional banks.

Peer-to-Peer Lending vs Traditional Banking

In recent years, peer-to-peer (P2P) lending has sprung up as an alternative to traditional bank loans. It’s a form of direct money lending that bypasses official financial institutions in which investors provide funds to would-be borrowers. Here’s a side-by-side look at the two forms of lending:

Peer-to-peer Lending Traditional Bank Loans
P2P lending matches borrowers and investors directly—typically through an online platform—without the use of an official financial intermediary, such as a bank. Borrowers apply for a loan from a bank.
Borrowers fill out an application with the platform which assesses risk and credit rating before providing loan options and interest rates. The bank assesses borrowers’ creditworthiness and determines whether or not to provide a loan and appropriate interest rates.
Loans may be more accessible to those with low credit scores or looking for atypical loans Banks may offer a limited number of loan products and may have few options available to individuals with poor credit.
Loans may offer lower interest rates or lower fees due to higher competition between investors.

Switching Bank Accounts

If you’re happy with your current traditional bank and bank accounts, you may be content to stay put. However if you’re unsatisfied or looking for tools that aren’t available at your bricks-and-mortar bank, then there may be reasons to switch bank accounts. Here are some questions to ask yourself and reasons you might want to make a change.

•  Fees: Review what’s being charged, from minimum balance and maintenance fees to significant overdraft fees and more. If they’re adding up at a current bank, it may be worth researching alternative banking solutions to see if fees are similar or perhaps even less than what’s currently being charged.

•  Customer service: How long does it take for an issue to be resolved, such as a fraudulent withdrawal? During what hours is the customer service line available? Are you currently being treated as a valued customer?

•  Life event: Is a wedding or other kind of partnership in the near future? This may be a time to open a joint account. See if your current financial institution offers the right features for you and your partner.

•  Convenience: Is the brick-and-mortar bank branch location inconvenient, perhaps after a move? Do ATMs come with hefty fees? Can you conduct all the transactions you want to with your mobile device?

•  FDIC insurance: Is your current bank FDIC-insured or is your current credit union NCUA-insured? Are there any other safety and security concerns with that financial institution? Insurance can provide peace of mind.

•  Mobile features: Are more features available at an alternative banking choice that are of interest? This could mean mobile check deposits, reimbursement of ATM fees, overdraft forgiveness, or a more user-friendly online portal.

How Many Bank Accounts Should You Have?

If a person decides to open an alternative bank account, does it still make sense to hang on to whatever traditional accounts they may already have? The short answer is that the number of bank accounts a person maintains is an individual decision. There may be benefits to having multiple accounts, but it’s also more to juggle.

Reasons it makes sense to have multiple accounts can include:

•  Having separate accounts for different purposes; for example, one savings account could be earmarked for emergencies, while another might contain funds being saved for a down payment on a house or for college expenses.

•  Couples may decide they like the idea of having separate accounts as well as one for joint expenses.

•  Freelancers and small business owners may want to separate personal banking from business banking.

Challenges associated with maintaining multiple accounts can include:

•  The risk of overdraft

•  More banking fees

•  More logistics involved to manage them all.

If more than one bank account is open, it can be important to find out how to transfer funds from one account to the other, as needed. If all of the accounts are held at the same institution, most banks have simple procedures to set up transfers, such as ones from a checking account to a savings account. This can often be done by filling out a form. Or, this can often be done through an ATM.

If bank accounts are held in different financial institutions, the information needed to complete a transfer will typically include routing numbers and account numbers. Banks may have slightly different procedures.

Recommended: How Many Bank Accounts Should I Have?

The Takeaway

There are many different ways to manage your money today, including whether you keep it with a traditional bank, a credit union, or an online bank or other kind of fintech. You’ll also have options like a standard savings account vs. a cash management account vs. money market account. Understanding the options available and the pros and cons of each will help you make the best decision for you. There usually isn’t a right or wrong choice, but an option that checks more of the boxes on your wishlist. It’s up to you!

If you’re in the market for a bank that offers competitive interest rates and no fees, take a look at what SoFi offers for online bank accounts. When you open our Checking and Savings with direct deposit, you’ll enjoy a competitive APY and pay no account fees. Plus, we offer a network of 55,000+ fee-free ATMs to make banking that much better.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.


1SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by banks in the SoFi Insured Deposit Program. Deposits may be insured up to $2M through participation in the program. See full terms at SoFi.com/banking/fdic/terms. See list of participating banks at SoFi.com/banking/fdic/receivingbanks.

SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 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.

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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Apr
11
2023
x Steps for Balancing a Checkbook

4 Steps for Balancing a Checkbook

By | Budgeting & Goals, Financial Independence, money | Comments Off on 4 Steps for Balancing a Checkbook

Admittedly, checks and checkbooks aren’t as popular as they were in the past, when they were a standard way to pay for life’s daily expenses. But that doesn’t mean that balancing a checkbook isn’t still a valuable skill and an important way to keep your budget in good shape.

It’s a smart idea to keep tabs on how much is coming into your checking account and how much is going out. This helps you avoid bouncing checks (and paying those steep overdraft fees), spot errors and fraud attempts, and know how well you are doing in terms of spending.

Many people shy away from balancing (aka reconciling) their checking account because it seems as if it’s a time-consuming task and may require high-level math skills. Not true!

Once you learn the four steps of balancing your checkbook, it is a simple task that can be accomplished in a few minutes once every week or so. Read on to learn:

•   What does balancing a checkbook mean?

•   How do you balance a checkbook?

•   What is the first step in balancing a checkbook?

•   What are the benefits of balancing a checkbook?

What Does Balancing a Checkbook Mean?

The task of balancing a checkbook actually doesn’t have anything to do with the checkbook itself (the stack of checks you may write to pay for goods and services), although your checkbook register is still a great tool for doing the job.

Rather, balancing a checkbook refers to the process of reconciling and cross-checking the many transactions that occur in your checking account.

To summarize the process of balancing your checkbook: This involves recording all of your deposits and withdrawals on a regular basis, adding and subtracting them as you go, and then comparing your numbers to the bank’s to make sure they agree.

Benefits of Balancing Your Checkbook?

Balancing your checkbook, whether with personal vs. business checks, comes with a number of key benefits. These Include:

Knowing Your Balance in Real Time

When you log every transaction, you add to your balance if it’s a deposit or subtract if you’re paying a bill. In this way, you are able to know the true balance of your account, which may not yet be reflected online or in your app.

That’s because when you write a check against your account, the bank won’t deduct those funds from your account until the person you gave the check to deposits it.

Your bank app may show you have $2,000 in your account but if you wrote a $1,000 check yesterday, you actually only have $1,000 available to spend.

Tracking Your Spending and Sticking with Your Budget

During the balancing process, you look at every transaction in your checking account for a period of time, whether it’s a day, a week, or a month.

You might find that you’re spending more than you thought or taking out more cash from the ATM each month than your current budget allows.

Balancing your checkbook on a regular basis can help you monitor your spending, and help to ensure you’re able to maintain your savings goals.

Reviewing Your Account for Errors, Fraud, or Billing Changes

Regular reviewing and tracking of your account’s expenditures can help you immediately spot any purchases or transfers of money that you don’t recognize.

You may also pick up on fees your bank is charging that you weren’t aware of or that are new.

Or, you might notice that one of your auto-pay bills has gone up in price. If your payments are processed automatically without your review, those increases could go unnoticed and unaddressed for months, disrupting your cash flow and possibly causing other financial issues down the line.

Recommended: Can I Use Checks With an Old Address?

Are There Reasons Not to Balance Your Checkbook?

You don’t need to balance your checkbook if you are using and are satisfied with another method to keep tabs on your spending. For instance, if your bank offers an app that works well for you, fine. Or perhaps you are in the habit of monitoring your checking account regularly and feel comfortable with that process.

As noted above, however, there can be a lag time between when you write a check or even swipe a debit card and when the charge is actually debited. This may lead you to believe you have more money on deposit than you truly do. That may motivate you to balance your checkbook instead.

How to Balance a Checkbook in 4 Steps

Here’s an easy step-by-step approach to balancing your checkbook.

1. Recording Your Current Balance

Here’s the first step toward reconciling your checkbook register: logging your bank account balance.

•   You can quickly find your checking account balance by going on your bank’s website or using its mobile app.

•   If you’re using a paper checkbook register, you can then record this number in the top spot above the spaces you use to log your transactions.

•   If you don’t have a register or prefer to go digital, you can create your own register on your computer, or use an open source spreadsheet platform, such as Google Sheets. An online spreadsheet has the advantage of being accessible anytime from any device.

That’s it for the first step in balancing your checkbook.

2. Recording Any Pending Transactions

The next step in balancing your checkbook involves recording transactions that haven’t fully processed yet.

•   Account for any pending transactions. These are transactions that you know are coming, but have not yet cleared. For example, when you deposit a check (whether at a bank, ATM, or mobile deposit), your bank might release only part of the funds immediately, placing a hold on the rest of the money until the check clears.

Similarly, when you pay for something with your debit card or a check, the transaction may take a day or two to go through.

•   You can write down the date of the transaction and a brief description and, if it’s a check, the check number.

•   Do the math next: Starting with the first transaction you enter, subtract the amount from your available balance, or, in the case of a deposit, add it to the balance.

•   Then record the new amount on the next line of your register. You can continue doing this until all transactions are reconciled. The final number is (ta-da) your current available balance: the actual amount you have in the account to spend.

3. Continuing to Record Transactions

Next, you can log transactions as they happen or at regular intervals.

•   As you continue to make transactions, you can then record them in your register or spreadsheet so you have a running tally of your debits, credits, and current balance. You’ll want to account for both checks, debit card usage, and deposits to the account.

You can do this as you go, or you can collect your receipts and record them in your checking register or spreadsheet at the end of the day or week.

Recommended: Differences Between Current Balance and Available Balance

4. Comparing Your Numbers

Now it may be time for a little bit of cross-checking detective work:

•   Once or twice a month, it’s a good idea to log on to your account and compare your bank’s total withdrawals and deposits and balances with your own records. If they match, you’re in good shape; you have a balanced checkbook.

If the numbers don’t align, you may then want to go back through your records, as well as the bank’s transaction history, to see where the discrepancy lies.

You may find that you forgot to record a transaction or you wrote down a number incorrectly, or made a simple math error. Or perhaps you forgot to account for account fees or a miscellaneous charge that was deducted.

Or you might pick up an error on the bank’s part, a change in the amount a vendor is billing you, or a potentially fraudulent charge. Generally, the quicker you pick up and address any discrepancies the better, particularly in the case of bank fraud or identity theft.

What Is a Check Register?

A check register is a compact booklet that acts as a kind of spreadsheet, helping you record transactions and tally your checking account’s balance.

These typically come when you order checks, or you can buy them at some retailers or online vendors.

Check registers can be a valuable tool in balancing your checkbook and staying on budget.

Is Knowing How to Balance a Checkbook Now Obsolete?

Knowing how to balance a checkbook may be less vital than it was in the past, but it is still an important skill for tracking incoming funds, outgoing payments, and your total amount of money on deposit.

If you don’t like the paper and pencil aspect of balancing a checkbook, you can use apps and digital tools to keep tabs on your funds.

Digitally Balancing a Checkbook

If you are the type of person who doesn’t like writing down numbers and calculating your available balance on paper, you can use digital tools to help the process along.

There are apps that promise to help you balance your checkbook, but some involve a fair amount of data entry. Your financial institution may offer tools (online and in an app) to help you check your balance, see charges, view pending transactions, and more. For many people, these can be a way to keep tabs on their account balance.

Opening Checking and Savings SoFi Accounts

Even in an increasingly paperless world, it can still be important to balance your checkbook.

Regularly balancing your checking account can give you a clear sense of not only how much money is in your bank account, but where your money goes.

This can help you track your spending, avoid bouncing checks, detect billing changes, and also spot errors or even fraudulent charges as soon as they happen.

If you’re looking for an easy way to keep tabs on your money, you may want to sign up for a new bank account with SoFi.

With SoFi Checking and Savings, you can get all the numbers you need to track your finances at a glance and on the go using the SoFi app. Plus, you’ll earn a competitive annual percentage yield (APY) and pay no account fees, which can help you money grow faster.

See how easy it is to manage your finances with SoFi Checking and Savings today.

FAQ

Is balancing a checkbook still necessary?

While balancing your checkbook isn’t as common as it was before, it is still a valuable way to keep tabs on the money in your checking account, spot errors, and identify any suspicious activity. It is also a wise move if you are trying to stick with a budgeting method and avoid overdrafting your account.

How do you balance a checkbook that hasn’t been balanced before?

You can start balancing your checkbook at any time. View your balance online, and log it in your checkbook. Account for any pending transactions, and then, going forward, note deposits, withdrawals and other debits, plus any fees that are taken out of your funds.

How often should you balance your checkbook?

It can be wise to balance your checkbook in real time. That means, it can be smart to note any checks you write as you do so, and log debit card transactions as they happen so you don’t forget about them. For some people, though, this isn’t convenient, and they prefer to spend a few minutes reconciling their checkbook once or twice a week. The choice is yours.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 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 direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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

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Mar
31
2023

How Does a Gas Credit Card Work?

By | Credit, credit card, Family Finances | Comments Off on How Does a Gas Credit Card Work?

Americans put a lot of money into their fuel tanks — from commuting to work to taking epic road trips — and gas credit cards are one option that can help cut the costs of getting around.

There are a few different types of gas credit cards to consider: branded gas cards that only work at specific gas stations, branded gas credit cards that you may be able to use elsewhere, and regular rewards credit cards that offer cash back or other incentives at the pump.

If you’re curious about the pros and cons of these cards, read on to learn:

•   What is a gas card?

•   How does a gas card work?

•   How do you get a gas card?

•   What’s needed for a gas card application?

What Is a Gas Credit Card?


So what is a gas card? The answer depends on whom you ask: The term can refer to a variety of different products (more on that in a moment). But at its most basic level, a gas credit card is a credit card that allows the cardholder to save money on gas, either with per-gallon discounts, cash-back rewards, or other incentives.

Given the wild fluctuations in the average price of gas, these cards can be an excellent way to lower your overall transportation costs, especially if you drive often. However, like any credit card, they do come with both risks and benefits.

Types of Gas Cards


As mentioned above, “gas credit card” and “gas card” can actually refer to several different products. Here’s a closer look.

Closed-loop gas cards


What is known as a closed-loop gas card is a card that can only be used at a specific gas station brand. They earn the cardholder discounts or rewards on money spent on that brand of fuel. They cannot be used at other gas stations or stores. This can make them convenient for those people who almost always go to the same gas station.

Of course, that limitation can also be too restrictive. Some people may want a card with more flexibility and capabilities. In addition, closed-loop gas cards can come with high interest rates, so if you don’t pay off your balance in full each month, you may actually end up spending more on gas overall.

Co-Branded Gas Station Credit Cards


Gas station credit cards vs. gas credit cards are co-branded. That means they bear the logo of both the gas station and a major credit card issuer, such as Visa or Mastercard. These cards may offer specific rewards at the pump. However, because they’re part of a major card network, they can also be used elsewhere.

These credit cards offer the benefit of being available for more general, all-purpose use. Of course, they also make it more possible to rack up debt on non-gas-related expenses, like cool shoes, the latest mobile device, or just about anything. As is true with any credit card, paying off your balance on time and in full each month is the best way to avoid paying interest on your purchases, which can quickly eclipse any rewards you might earn.

Traditional Gas Rewards Credit Cards


Finally, regular rewards credit cards may offer cash back, miles, points, or other rewards at the pump and elsewhere. Some rewards credit cards may allow borrowers to choose specific categories in which they’ll earn rewards at a higher rate, and the fuel pump might be one of those categories.

Traditional rewards credit cards offer ultimate flexibility in how and where you get rewarded for spending your money, so this could be an excellent choice for those whose budget fluctuates over time.

For instance, perhaps you spend a lot on gas over the summer because you’re taking road trips, but less so during the fall and winter. A traditional rewards credit card may allow you to choose gas stations as a category for part of the year — and another, more relevant category (like grocery stores) for the rest.

However, like all credit cards, they do come with the risk of falling into debt by carrying an ever-larger revolving balance.

How Do Gas Credit Cards Work?


Here’s how a gas card works in most situations: Although there are several different types of gas credit cards, they typically sync up with how any credit card works. You use the card at the point of sale to purchase gas and reap rewards or discounts. Usually this is done by swiping the card at the fuel terminal or, if it’s not a closed-loop card, at another point-of-sale system.

With non-closed-loop gas credit cards, you may also be able to use the card to make online purchases by typing in the relevant card information. (Always make sure the website you’re purchasing from is legitimate and secure before supplying your credit card number!)

Like any credit card, gas credit cards usually charge interest on revolving balances; that is, money you charge on the card and don’t pay off at the end of the statement period. Interest rates can be hefty — upwards of 20% APR (annual percentage rate) — which is part of what makes falling into credit card debt so possible. That’s why paying off your balance in full and on time, each and every month can be crucial.

If you can’t, you might consider consolidating your debt with a 0% balance transfer or personal loan.

Things to Consider Before Applying for a Gas Credit Card


While a gas credit card can help you save money at the pump, like any other credit card, it can also put you at financial risk, especially if you’re already struggling to make ends meet and pay down debt.

In addition, applying for a gas credit card will result in a hard inquiry on your credit report, which can lower (although usually only in the short-term) your credit score.

How to Get a Gas Credit Card


In terms of how to get a gas card, it’s similar to applying for a credit card of any kind. There will be information you need to share about yourself and your finances on a gas card application.

You can apply for gas credit cards at the gas station offering one or online. The application process will require basic demographic information, like your name and address, as well as financial information such as your employment situation and annual income. Once you’re approved for the card, you’ll receive it in the mail and can start using it for gas purchases — and, if it’s a major network credit card, purchases elsewhere, too.

Putting Money on a Gas Card


In addition to gas credit cards, there are also reloadable prepaid gas cards which are not credit cards. They’re more like debit cards in that you can use them only to access a finite amount of preloaded money on the card.
These types of cards can be a useful tool for managing gas spending and controlling your budget. You can load them with money at the gas station or online.

How to Pay With a Gas Card


How to pay for gas with a card works just as it would with any other card. You use it at the point-of-sale system (or present it to the person at the pump, if you’re in Oregon or New Jersey).

If you’re using a refillable gas card, you’ll need to load money on it ahead of time. If you’re using a credit card, you’ll get a monthly statement listing everything you’ve spent over the billing period and will have the opportunity to pay it off in full, which is a wise move vs. paying the minimum amount.

Is a Gas Credit Card Right for You?


If you find yourself spending a lot of money at the fuel pump, a gas credit card could help you pinch some pennies and get where you’re going for less. But like other credit cards, the risk of going into debt — or at least paying more than you need to after interest — is real. A prepaid gas card could be a good middle-ground option to help you stick to your transportation budget and manage your gas money budget more easily.

The Takeaway


There are multiple different types of gas credit cards, but they all generally have the same benefit: making the cost of gas more affordable by providing discounts or rewards at the pump. Whether you opt for a gas credit card or a reloadable gas card, this kind of product can make budgeting simpler, as long as used wisely.

Finding a credit card that can reward you for good financial decisions is a total game-changer, and that can be what the SoFi Credit Card does. With it, you’ll earn unlimited 2% cash back rewards, including those that can help you pay down debt.

The SoFi Credit Card: Put it to work in your wallet.

FAQ


What is the difference between a gas card and a credit card?


People may use the term “gas card” to refer to prepaid gas cards or gas credit cards specifically designed to offer the cardholder rewards at the pump. A regular credit card doesn’t necessarily offer any specific fuel savings, but a gas credit card can.

Does a gas card affect your credit?


If you apply for any credit card, the issuer will run a hard inquiry on your credit history, which may have a short-term negative effect on your credit score. In addition, late payments and high balances can drive your score down, as well, but paying off your debt in full and on time can help create a healthy credit history.

Can you buy other things with a gas card?


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Can you get cash back from a gas card?


Some gas credit cards offer cash back rewards. You can also find unlimited cash back rewards credit cards that aren’t specifically designed for gas savings but can still help you earn back a percentage of every dollar you spend.

Photo credit: iStock/Eleganza

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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1See Rewards Details at SoFi.com/card/rewards.

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 .

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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