Anyone can use a money order to send or receive money. While money orders aren’t the most common tool, they’re usually simple to obtain and cash. To cash a money order at no charge, visit your local post office branch and present your money order at the window.
In this article, we outline where to cash postal money orders and what the process looks like.
• Money orders can be cashed at various locations, including banks, credit unions, post offices, and retail stores.
• Some places may charge a fee to cash a money order, so it’s important to compare fees before choosing a location.
• To cash a money order, you typically need to endorse it and provide identification.
• It’s important to keep the receipt or a copy of the money order in case it gets lost or stolen.
• If you don’t have a bank account, you can still cash a money order by using a check cashing service.
What Is a Postal Money Order?
A postal money order is a type of financial certificate issued on paper by the post office. Similar to a paper check, the document is worth the amount of money determined by the person or company that purchased it. While you can obtain a regular money order from almost any bank, only the United States Postal Service (USPS) issues postal money orders.
Unlike a check, a postal money order is prepaid by the party sending it, so it can’t bounce. Money orders also never expire. A receipt is provided to the purchaser in case the money order is lost, stolen, or damaged. As a result, you can use a postal money order to securely send a payment through the mail.
Another advantage of money orders is that they are difficult to counterfeit. You can make a payment of up to $1,000 with a single order.
To send a money order, you must pay for it ahead of time using cash, a debit card, or a traveler’s check. Although it is possible to buy a regular money order with a credit card, you cannot put postal money orders on a credit card.
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If you receive a postal money order, you can redeem its face value by cashing it. There is no advantage in keeping a postal money order long-term, since it doesn’t earn interest and cannot be used directly to make a purchase.
Here’s how to cash a money order at the post office for free:
1. Bring the money order and a photo ID to a post office service counter.
2. Sign the money order in view of the postal worker (do not sign it ahead of time).
3. You will immediately receive the cash value of the money order.
Where to Cash a Postal Money Order
You can cash a postal money order in certain places outside the post office. Many banks will cash postal money orders, as long as you have an account there. Some grocery stores and retailers will cash money orders, too.
Because proof of ID is required, you cannot deposit money orders via a mobile banking app.
List of Places That Cash Money Orders
Here are some locations that may cash a postal money order:
• Most banks. Check with your local branch.
• Check-cashing retailer. Consumers without a bank account or nearby post office may cash money orders here for a fee.
• International postal office. The post office offers special international money orders that can be cashed at banks and post offices in some other countries.
• Rural mail carrier. Some mail carriers may cash money orders for rural customers if they have enough cash on hand.
• Some supermarkets and major retailers. Search online for “places to cash a money order near me.”
You’ll want to examine your money order before attempting to deposit it in order to ensure it’s authentic. Here are a few ways to spot a fraudulent postal money order:
• Look closely at the paper. Valid postal money orders have special markings and designs to prevent fraud. Visit USPS.com to view a sample money order.
• Review sum amount. If the dollar amount is faded, too large, or not printed twice on the paper, it could be fraudulent. All postal money orders must be under $1,000 and have the sum printed twice on the paper. International postal money orders cannot exceed $700, or $500 for El Salvador and Guyana.
If you think your postal money order is fake, contact the U.S. Postal Inspection Service at 1-877-876-2455.
Cashing a USPS money order is a straightforward process. Your local post office can cash a postal money order at no cost to you. You may also be able to cash a postal money order at a bank branch if you have an account there, or at your local supermarket.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
See exactly how your money comes and goes at a glance.
FAQ
Can you mobile deposit a USPS money order?
Unfortunately, you cannot use mobile deposit for USPS money orders. Instead, you must deposit it in person with a valid ID.
Where can I cash a money order for free?
You can cash a postal money order for free at your local post office. You may also be able to cash it at your local bank branch.
Can you cash a money order online?
Since you need proof of ID to deposit a postal money order, you usually can’t deposit it online.
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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.
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.
Canceling a credit card might seem like a good idea if you’re trying to get debt under control or you want to consolidate your cards. But closing a credit account may do more harm than good and damage your credit standing. Before you take action, here’s what you need to know — and other strategies you may want to consider instead.
Understanding the Impact of Credit Utilization Ratio
In order to understand why canceling a credit card can hurt your credit score, you need to know about something called the credit utilization ratio. This is the ratio of your total credit to your total debt.
Another way to think of it is how much of your available credit you’re using. For instance, if you have two credit cards with a total line of credit of $20,000 and you use $5,000 of that, you have a credit card utilization ratio of 25%. In addition to credit cards, your credit utilization ratio can include things like loans, such as a mortgage, car loan, and personal loan.
Your credit utilization ratio directly affects your credit score. In fact, it accounts for 30% of your FICO score. Your credit utilization ratio is the second-most important factor in your credit score (payment history is number one). Ideally, lenders like to see a person’s credit utilization ratio below 30%.
When you cancel a credit card, you reduce your available credit. This can cause your credit utilization ratio to jump up — especially if you owe money on other credit cards — and can negatively impact your credit score.
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Reasons to Cancel a Credit Card
There are several factors that may be motivating you to want to cancel a credit card, including:
• Too much debt. Perhaps having the card on hand is causing you to overspend and take on even more debt. If canceling the card will help you manage your finances better and get your debt under control, it can be a good option.
• A high annual fee. If the card’s fee is high and you aren’t taking advantage of any of the perks like travel rewards to offset it, you may want to find a card that’s a better fit.
• Too many cards. If multiple credit cards are causing you to stress out and miss payments, fewer cards might help lighten the load. (A budget planner app can help you spot upcoming bills and manage bill paying.)
How to Cancel a Credit Card
If, after considering the pros and cons, you’ve decided to go ahead and cancel the credit card, here’s how to do it:
1. Pay off the remaining balance on the card, or transfer the balance to another credit card.
2. Contact the credit card company, preferably by phone. Some credit card companies allow customers to cancel online, but most will require a call. Keep in mind the company wants to hold onto customers, which could mean that they will try to entice you with offers or deals. You have the right to cancel at any time.
3. Consider sending written confirmation to make things official. Send a letter to the credit card company informing them that you have canceled the same credit card account. Post it via certified mail to ensure the company receives the letter with confirmed receipt.
4. Cut up the card. Shredding or destroying the card helps prevent fraud.
5. Look at credit reports for changes to your credit score. The canceled account should be reflected in your credit score within several weeks. AnnualCreditReport.com offers a free copy of your credit report once a year.
Keep in mind that you can also track your credit score with a money tracker app. It helps you stay up to date with any changes that affect your score, allows you to connect all your bank accounts, and lets you monitor your spending habits and savings all in one place.
Can Closing a Credit Card Impact Your Credit History?
Closing a credit card can affect the length of your credit history. That’s important because credit history is one of the factors used to help determine your credit score. In general, creditors want to know that you’ve had credit accounts over a period of time, so the longer the relationship, the better.
If you’re considering canceling your credit card because of high fees or a high interest rate, you might want to downgrade the card instead. By downgrading, you can swap your current credit card for one with a lower fee or lower interest rate.
Downgrading can provide some of the benefits of canceling the card without the negative impact of closing the account.
If downgrading sounds like a good option for you, these strategies can help:
• Research the credit card issuer. Do they have cards with a low or no annual fee? It may be worth switching to credit card issuers with one of those.
• Call the credit card company and ask for a downgrade. They may offer to waive the annual fees on your existing card. Or they may downgrade you to a low-interest card with no annual fee.
• Ask about a partial refund. Some credit card companies will provide a partial refund on the annual fee, depending on when you downgrade. Ask the customer service representative if they can prorate the annual fee or provide any refund.
How to Keep Your Credit Utilization Rate Low
Whether you downgrade a credit card or not, it’s important to improve your credit utilization rate since it counts for 30% of your FICO score. Here’s how to keep yours low.
• Make more than one credit card payment a month. Making more than two automatic bill payments or one payment per billing cycle can benefit your credit score. That’s because credit card companies report balances towards the end of the billing cycle. Making several payments can reduce your credit utilization ratio when your balance is reported.
• Keep credit accounts open, if possible. Keeping a card open, even if you rarely use it, increases your credit limit and helps lower your credit utilization rate.
• Ask for an increase in credit limit. If you have a record of on-time payments, your credit card company may be willing to increase the credit limit for your account. And the more available credit you have, the better your ratio. Call customer service to make the request.
The Takeaway
Canceling a credit card can negatively impact your credit score, so make sure to consider all your options carefully. You can keep the credit account open, which can help with your credit history, and rarely use the card. Or you can downgrade to a card with a lower interest rate and no annual fee. In the end, the decision is yours, but it’s good to know you have choices.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
See exactly how your money comes and goes at a glance.
FAQ
How do I close a credit card without affecting my credit score?
Closing a credit card is likely to have a negative impact on your credit score. Downgrading to a card with a lower interest rate and no annual fee may be a better option.
Is it better to cancel unused credit cards or keep them?
If the credit card has a low interest rate and no annual fee, it can be better for your credit score and your credit history to keep the card.
Does canceling a credit card hurt your credit?
Canceling a credit card can hurt your credit score. However, practicing other good credit habits, like paying your bills on time, can help you gradually get back in good standing.
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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
By Jacqueline DeMarco |
Credit, relay |
Comments Off on How Long Does It Take for a Refund To Appear on a Credit Card?
In our digital world we like things to happen immediately. Unfortunately, it can take days, if not weeks, for a credit card refund to appear on a cardholder’s account.
How long does it take for a refund to appear on a credit card? Keep reading for insight into how credit card refunds work, types of refunds, and tips for getting your refund faster.
What Is a Credit Card Refund?
Before we can properly explain what a credit card refund is, it’s helpful to understand how credit card purchases work and who the main players are.
For every credit card transaction, there are two companies that help facilitate the purchase: credit card issuers and credit card networks. The credit card issuer is the company that creates and manages the credit card. The company essentially lends money to the cardholder to make a purchase. The credit card network is the business that processes the transaction electronically. It does this by transferring the money from the credit card issuer to the merchant.
Whenever someone makes a purchase with a credit card, the credit card issuer is the one to pay the merchant. Later, the cardholder pays the credit card issuer back.
With credit card refunds, this entire process works the same way but in reverse. When a merchant refunds a purchase, the money goes to the credit card issuer. Then the credit card issuer returns that amount to the cardholder’s account.
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As briefly noted above, when a consumer requests a credit card refund through a merchant, the merchant issues the refund directly to the credit card issuer, and then the issuer pays the account holder back. This is why merchants don’t typically refund credit card purchases in cash.
If the cardholder pays off their balance in full before a refund hits their account, they may end up with a negative balance. In this case, a negative is a good thing: It just means you have a credit on your account instead of the usual charges. You don’t need to do anything about a negative balance.
Types of Credit Card Refunds
There is only one type of credit card refund that consumers are involved in. The merchant and the credit card issuer (with the use of a credit card network) will work together to complete the refund and to get the money to the consumer.
Potential Delays for Credit Card Refunds to Appear
Exactly how long does it take for a refund to appear on a credit card? The timeline can vary based on a few variables. It can take time to process a refund, and all the consumer can do is wait.
In general, the retailer’s return policy dictates how long a consumer will wait to get their refund. Most retailers have a policy of refunding a purchase within three to five business days. The return policy can usually be found on the retailer’s website.
Online returns can be particularly lengthy and usually take longer to process than in-store returns because shipping is involved. It can take over a week just for the returned package to arrive and be processed before the refund process is initiated. Then the cardholder has to wait for the refund to appear on their monthly statement.
Here’s a few examples of common issues that cause refund delays.
Billing Disputes
Getting a billing dispute taken care of can take longer than a standard refund. In that case, the customer must file a dispute with the credit card company to receive a credit. Some examples of issues that may require a dispute are:
• Being billed for a product you didn’t receive
• Getting charged twice for the same purchase
• Failing to receive credit for a payment
Mistakes happen and billing disputes can take a while to resolve. In some cases, a credit card chargeback may be necessary.
Merchant Delays
All merchants have their own timeline for processing credit card returns. It can take a week or two depending on how slowly the merchant tends to process their refunds.
Cases of Identity Theft
If someone needs a refund for a purchase on their account that is a result of identity theft, it can take quite a while to fully resolve that issue.
How Does a Credit Card Refund Affect Your Credit?
If someone doesn’t pay off their credit card balance while waiting for a return to process, they will carry the balance on their credit card. In addition to expensive interest charges, carrying a balance affects the consumer’s credit utilization ratio, which can harm their credit score.
A credit utilization ratio compares how much available credit someone has to how much of it they’re using. Ideally, it’s best to keep the utilization ratio below 30%. Financial software like SoFi offer free credit monitoring, a debt payoff planner, and other handy tools to make sure you aren’t taken by surprise.
The best chance someone has at getting a quick refund is simply to make the return as soon as possible. If a consumer is in a rush to get their money back, they can request a store credit refund from the merchant, which will be issued immediately.
That means the customer will have to spend that money in-store, leaving the purchase amount on the credit card bill to be paid off. On the bright side, this method results in the cardholder getting to keep any cash back or rewards points that the purchase earned.
The Takeaway
It can take anywhere from a few days to a few weeks for a refund to appear on a credit card. The exact timeline varies based on the merchant and credit card issuer involved, as well as other factors that can cause delays (such as slow shipping times). Patience is key, but it helps to be aware of what the merchant’s and credit card issuer’s return policies and expected timelines are.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
See exactly how your money comes and goes at a glance.
FAQ
How long do refunds take to show up on credit cards?
It can take as little as three days for a refund to show up on a credit card. That said, it can take longer depending on the merchant and credit card issuer involved. Returns that require shipping back merchandise can take the longest, because the consumer has to wait for the merchandise to arrive and be processed before a refund can be initiated.
Why is my refund not showing up on my credit card?
A refund can take days, if not weeks, to show up on a credit card. Don’t be afraid to check in with the credit card issuer on the status of a refund. Instead of waiting for a new statement to come in the mail at the end of the month, it can be more expedient to review an online account statement.
Why do card refunds take so long?
Credit card refunds can take a while for a few reasons. To start, all merchants and credit card issuers have different refund timelines. Other things like slow shipping times (for online purchases) or issues with identity theft can cause additional delays.
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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.
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.
By Emma Diehl |
Credit, relay |
Comments Off on How to Get a Refund That Was Sent to a Canceled Credit Card
When a refund goes to a canceled credit card, it may seem like that cash is lost for good. However, getting your money back just requires a few calls to the credit card company and the merchant, and a little patience.
There are ways to avoid a refund going to a canceled credit card and methods to recover the cash if it’s stuck in limbo between the retailer and the credit card company. Keep reading to learn how to avoid this situation, and what your options are.
• When you cancel a credit card, you may be eligible for a refund of any remaining balance or fees.
• The refund process varies depending on the credit card issuer’s policies.
• It’s important to contact the credit card issuer to inquire about any potential refunds.
• Keep track of your cancellation request and follow up if necessary to ensure you receive your refund.
• Be aware of any potential fees or penalties associated with canceling a credit card.
Can You Stop a Refund From Going to a Canceled Credit Card?
To avoid a refund going to a canceled credit card, the easiest approach is to reach out to the merchant before starting the refund process.
Ask the business if it’s willing to refund the purchase in a different way. That’ll likely mean store credit or a gift card. In some instances, it could mean receiving cash back or refunding the purchase to a different credit card.
Going to the business first may involve calling customer service or visiting a bricks-and-mortar location. If the business is willing to refund the purchase differently, you’ll avoid the long process of getting back a refund that went to a canceled credit card.
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Steps for Getting a Refund on a Canceled Credit Card
When a refund is going to a canceled credit card, you have a few options to ensure the credit doesn’t go to waste. It can help to know a little about how credit cards work, but it’s not essential.
1. Check if Your Canceled Card Account Is Still Open
In the event that a credit card was canceled due to theft or loss, don’t worry. If the account is still open under a new card number, the refund from the merchant will be credited back to the new card.
2. See if the Refund Was Accepted by the Card Issuer
When there’s no longer a credit card associated with the account, things get trickier. What happens next will vary based on how long ago the cardholder closed the account.
If the customer can still log in to their account, they may see the refund reflected online. But if the account is long closed and can’t be accessed online, first the customer should reach out to the merchant and ask for the Acquirer Reference Number. Armed with this information, they can then talk to the credit card company.
3. Request the Refund
If the merchant says the refund was posted to the old account, call the credit card company and request a refund via check. This is when the Acquirer Reference Number can come in handy. In some cases, the credit card company or bank may ask for a written request.
4. Be Patient
A standard refund usually takes a week, but getting a refund from a canceled credit card can take longer, depending on merchant policy, credit card company policy, and even the returned item or service.
Generally, expect a refund between seven and 14 business days after your request. If 30 business days elapse with no refund, it’s time to follow up with the merchant.
5. Return Directly to the Merchant for the Refund
If 30 days pass without a refund, it may be time to return to the store to track down the refund.
In some cases, the card issuer may reject a refund to a closed account and send it back to the store. Reach out to the store’s customer service and ask if it received a bounce back from the credit card issuer. If the store did, customers might be able to request a refund in the form of store credit or cash.
This process can be complicated or tedious, depending on the retailer’s size and bookkeeping system. An independent retailer is unlikely to have a customer service department, so going to the store with receipts and reference numbers could help speed up the process.
How To Avoid a Refund Going to a Canceled Card
Asking for an alternative refund method is one way to avoid a refund going to a canceled card, but here are a few other ways to steer clear of the lengthy process.
• Conduct an audit of transactions before canceling a credit card. Are there any purchases you plan to return? Keeping the card open until the refund is processed could make sense.
• Keep an eye on finances. A money tracking app can help you keep tabs on your spending, avoiding the confusion of which refund goes on what card. Some services also offer free credit monitoring and a debt payoff planner.
• Think long and hard before canceling a credit card. Canceling a credit card can harm your credit score, and canceling one out of the blue may lead to more issues than benefits. Closing a card without thinking it through could lead to refunds on a canceled card.
The simplest way to avoid a refund going to a canceled card is by going straight to the merchant and asking them to refund the amount through an alternative means. That could mean getting store credit, but it’ll sidestep the credit card company and get your money back faster. If a refund does go to a canceled card, it’s not lost for good. It’ll just take a few steps to get the refund.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
See exactly how your money comes and goes at a glance.
FAQ
Can I get a refund that was sent to a closed credit card?
Yes, but getting the refund will depend on if the account is still open, how long the card has been closed, and the credit card company’s policies.
Photo credit: iStock/MBezvodinskikh
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.
*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.
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.
You may be getting divorced, but you’re not alone. According to the U.S. Census Bureau, 34% of women and 33% of men in the United States are right there with you, having ended their unions.
Certainly, though, this life event can cause emotional turmoil, and it may trigger worries about money too. Take heart: The end of a marriage does not have to mean an end to financial security. If you keep calm and make a careful post-divorce budget, you are more likely to stay fiscally fit.
Why Is a Post-divorce Budget Critical?
A realistic budget after divorce is a must. It can often cost a lot more to run two households than one. Still, doing what’s right for your personal life path and well-being comes first; there’s no point staying unhappily wed simply to save money. It can be possible to find steady footing during this transition with the right basic living expenses budget.
Truth is, after the sometimes hefty expense of a divorce lawyer (if you hired one), you will possibly be solely responsible for housing, utilities, groceries, car maintenance, and more.
There are various ways to budget for this, including the 50/30/20 rule and the envelope system, among others. You’ll also likely encounter a variety of tools, including spreadsheets and apps. Take the time to review your options and find an approach that feels right for you.
Lifestyle Pre-divorce and Post-divorce Will Be Different
Get ready for changes in your lifestyle and your cash management. Transitioning from couplehood to single status can take time, patience, and being kind to yourself.
You will likely need to set up your own bank account, for example, if you previously had a joint account with your ex. And you’ll need to put your place of residence, you car, and utility bills, among other things, in your name.
You may be responsible for more household chores now, as you may not be able to afford, say, the cleaning person or landscaper you used to employ. Trimming the leisure budget (dinners out, vacations, entertainment, fitness classes) might be necessary, but all is not lost. Prioritize what is most important to your self-care now. This can be a bump in the road, not the end of the line.
Newly Single Life Can Be Taxing Emotionally and Financially
Divorce can affect your spirit as well as your finances. If you’re struggling and don’t have a therapist, consider finding one and/or joining a support group in your community. We can’t always “adult” our way through rough times.
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Finances for Children May Be Difficult
Children are a hot-button topic for almost all parents, both married and divorced. Meeting their emotional and financial needs can lead to a tug-of-war, especially if you and your ex don’t communicate calmly and effectively.
As your divorce unfolds, pay close attention to what counts as child support. For instance, you may want to continue your child’s soccer league, guitar lessons, or art classes, but these activities may or may not be covered. Also, if you have a teen who is begging for a used car, that large expenditure may not be covered by child support either.
Knowing just what counts as a child support expense, along with careful record keeping, will be important as you develop with your divorce budget. After all, knowledge is power. It will help you negotiate and budget better as a single parent, as well as keep the peace as you co-parent.
Recognize You Can No Longer Rely on Two Incomes
It can be a huge learning curve: Relying on a single salary instead of two. This post-divorce situation can be especially complicated if your ex had the employee benefits, including family health and dental insurance, 401(k) contributions, and a flexible spending account (FSA), where payroll deductions cover everything from child care to eyeglasses.
Now is the time to investigate what options you have to gain self-sufficiency and stay on budget. For example, if you work, does your employer offer an affordable health insurance plan? If you are self-employed, what networking groups could advise you on good options? Do you perhaps qualify for a lower-cost health insurance plan on the marketplace? Explore ways to save money, too. For instance, perhaps a high-yield savings account might be right for you. Even if you contribute just $20 a week, the money can add up and earn interest over time. Invest some time in seeing what’s available that suits your needs and budget.
Potential Questions to Ask Yourself
As you move through your divorce process and onto your newly single life, ask and answer the big questions. These can help you both trouble-shoot and thrive.
• How much is my income going to change? First, look at past bank statements. See how much your spouse and you have each contributed to the family income. In many cases, of course, alimony will come into play, but you need a realistic income-based expectation for that, too.
• What do I need to let go of? This may take soul-searching. As you go from two incomes to one income, it’s likely that something’s got to give in terms of expenditures. Think creatively about where and how to economize. You might decide to plan and cook ahead for the week to minimize the temptation and expense of eating out. Or perhaps you decide to split an apartment with a friend for a while to save on rent while you get your bearings. It’s your call.
• How should I supplement my income? If you need to get cash flowing your way, contemplate what’s in your toolbox of strengths and skills. One of the key benefits of a side hustle is that it can boost your income and fit your schedule. Maybe you’re a super-organized person who offers decluttering skills, a tech-savvy type who can build websites for others, or an animal lover who pet-sits or walks dogs. Other ideas: Fill free hours as an Instacart shopper, Amazon delivery person, or Uber driver.
• How will we fairly work out financial support for the kids? Are the children dividing their time 50/50 between you and your ex? What will your child support agreement entail? What additional expenses may come up in the future (tutoring, college prep classes)? Think and work it through, possibly with professional guidance.
Post-Divorce Budgeting Tips
Once you have mulled over the issues relating to post-divorce life, keep these strategies in mind to help you optimize your finances.
Focusing On Current Income
Base your budget on your income now, after taxes. Do not base it on the projected income you hope to have. Don’t get caught up thinking about your former two-person income. Being pragmatic right now will likely pay off and help you stay out of debt.
Focusing On Most Important Monthly Expenses
For now, prioritize what it will take to get through daily life. Calculate costs of a roof over your head, a way to get to work, food, child care, healthcare, and other essentials. Take care of people first, starting with yourself; then deal with material things later.
Letting Go of Unnecessary Items
Go ahead and slash some items out of your budget. There are some easy ways to save money. Perhaps you can jettison a couple of streaming services, cut back on clothes shopping, and mow your own lawn instead of hiring someone else to do it. That feeling of opening up some room in your budget can be priceless.
Giving Yourself Safe and Budget-Friendly Fun
Find the right mood lifters. Avoid expensive, impulsive purchases when you are feeling emotionally hurt and raw. They can wreak havoc with your finances.
Instead, treat yourself to free or low-cost adventures and experiences. Fresh air can be healing and motivating; local parks and wildlife sanctuaries may offer free guided walks and birdwatching outings.
Considering Working With a Financial Advisor
As you sort out your finances as you approach a divorce, you may want to enlist a professional versed in the issues that can crop up. Child support, shared credit-card debt, and division of jointly owned real estate can require this kind of guidance. A certified divorce financial analyst (CDFA) is trained to assist with this and help you get the fairest possible deal. Explore the possibility and find out the CDFA fees to see if it’s a good option for you.
Post-divorce, you might also seek out an advisor who can help you set up a financial plan so that your spending and saving habits suit your new situation.
The Takeaway
Transitioning from pre-divorce to post-divorce life can stir up fears and insecurities, but you can take concrete steps to manage the unknown. Face facts about income, set a realistic budget, and find the right bank account. Prioritize your needs, and be willing to put unnecessary expenses on hold for now. Like so many others, you will find your footing and peace of mind, thanks to patience, flexibility, and wise budgeting.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
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FAQ
How do you budget after a divorce?
To budget for post-divorce life, assess and prioritize non-negotiable needs (such as housing, food, utilities, and child care), and phase out or reduce unnecessary extras. Pay attention to the details of your divorce agreement, as alimony and/or child support may impact your finances significantly.
How long does it take to financially recover from divorce?
The timeline for recovering financially from divorce varies tremendously, depending on the particulars of a person’s income, divorce agreement, and other factors. It may take around five years to fully regain your sense of control over your money, though that could happen much sooner (or take even longer) for some.
Will I be poor after divorce?
The U.S. Census Bureau reports that after a divorce, household income for women can drop considerably. This is all the more reason to budget carefully after divorce and seek professional advice. These steps could help you avoid costly mistakes that impact your financial wellness.
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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.
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