SpendSLR Archives

Mar

2025

How to Transfer Money From One Bank to Another

By Austin Kilham | Budgeting & Goals, Financial Independence | No Comments

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

Key Points

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

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

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

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

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

🛈 SoFi members interested in bank-to-bank transfers can review these details.

What Is a Bank-to-Bank Transfer?

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

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

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

Things to Consider Before Transferring Money

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

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

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

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

4 Ways to Send Money From One Bank to Another

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

1. Online Bank Transfer

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

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

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

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

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

2. Peer-to-Peer Payment App

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

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

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

3. Wire Transfer

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

4. Writing a Check

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

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

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

Comparing Bank-to-Bank Transfer Methods

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

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

Staying Safe When Transferring Money from One Bank to Another

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

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

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

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

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

Test your understanding of what you just read.

The Takeaway

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

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

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

🛈 SoFi members interested in bank-to-bank transfers can review these details.

FAQ

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

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

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

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

Can you transfer large amounts of money between banks?

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

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

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

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

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

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

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

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

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

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

SOBNK-Q324-085

Mar

2025

A Complete Guide to Private Student Loans

By Kayla McCormack | Fresh Out of School, Student Loans, student_loan | No Comments

The average cost of college in the U.S. is $38,270 per year, including books, supplies, and daily living expenses, according to the Education Data Initiative. While grants and scholarships can significantly lower your out-of-pocket expenses, they typically don’t cover the full cost of your college education.

Student loans, both federal and private, can help bridge this gap in financial aid to allow you to attend the college of your choice. Federal student loans are funded by the government. They tend to offer the best rates and terms, but come with borrowing limits. If you still have gaps in funding, you can turn to private student loans.

Private student loans are funded by banks, credit unions, and online lenders. Private lenders set their own eligibility criteria, and interest rates generally depend on a borrower’s creditworthiness. While private student loans don’t offer all the same borrower protections as federal loans, they can still be a smart choice to help you pay for educational expenses, as long as you do your research.

This guide offers private student loan basics, including what they are, how they work, their pros and cons, and how to apply for one.

Key Points

• Private student loans are offered by banks, credit unions, and online lenders. They are a funding option for students after federal student loans have been exhausted.

• Approval for private student loans typically depends on the borrower’s creditworthiness; students may need a cosigner due to limited credit history.

• Private loans may lack flexible repayment plans and protections that federal loans offer.

• Funds are usually sent directly to the educational institution to cover tuition and fees; any remaining amount is disbursed to the student.

• It’s essential to thoroughly research and compare private loan options, considering factors like interest rates, repayment terms, and borrower protections, before making a decision.

What are Private Student Loans?

Often when people talk about student loans, they’re referring to federal student loans, which are provided by the federal government. Private student loans, by contrast, are funded by banks, credit unions, and online lenders. Students typically turn to private student loans when federal loans won’t cover all of their costs.

You can use the money from a private school loan to pay for expenses like tuition, fees, housing, books, and supplies. Interest rates for private student loans may be variable or fixed and are set by the lender. Repayment terms can be anywhere from five to 20 years.

Unlike federal student loans, borrowers must pass a credit check to qualify for private student loans. Since most college students don’t have enough credit history to take out a large loan, a cosigner is often required.

💡 Quick Tip: New to private student loans? Visit the Private Student Loans Glossary to get familiar with key terms you will see during the process.

How Do Private Student Loans Work?

How Private Student Loans Work

Loan amounts, interest rates, repayment terms, and eligibility requirements for undergraduate private student loans vary by individual lender. If you’re in the market for a private student loan, it’s key to shop around and compare your options to find the best fit.

To get a private student loan, you need to file an application directly with your lender of choice. Based on the information you submit, the lender will determine whether or not you are approved and, if so, what rates and terms you qualify for.

If you’re approved, the loan proceeds will typically be disbursed directly to your university. Your school will apply that money to tuition, fees, room and board, and any other necessary expenses. If there are funds left over, the money will be given to you to use toward other education-related expenses, such as textbooks and supplies.

Repayment policies vary by lender, but typically you aren’t required to make payments while you’re attending school. Some lenders will allow you to defer payments until six months after you graduate. However, interest typically begins accruing as soon as the loan is dispersed. Similar to unsubsidized federal student loans, the interest that accrues while you’re in school is added to your loan balance.

The Pros and Cons of Private Student Loans

Pros of Private Student Loans	Cons of Private Student Loans
Apply any time of the year	May require a cosigner
Higher loan amounts	Less flexible repayment options
Choice of fixed or variable rates	No loan forgiveness programs
Quick application process	Can lead to over-borrowing
Options for international students	No federal subsidy

If federal financial aid — including grants, work-study, and federal student loans — isn’t enough to cover the full cost of college, private student loans can fill in any gaps. Just keep in mind that private student loans don’t offer the same borrower protections that come with federal student loans. Before taking out a private student loan, it’s a good idea to fully understand their pros and cons.

The Benefits of Private Student Loans

Here’s a look at some of the advantages that come with private student loans.

Apply Any Time of the Year

Unlike federal student loans, which have application deadlines, you can apply for private student loans any time of the year. As a result, they can be helpful if you’re facing a mid-year funding shortfall or if your college expenses go up unexpectedly.

Higher Loan Amounts

Federal loans have annual maximums. For example, a first-year, dependent undergraduate can borrow up to $5,500 for that year. The aggregate max a dependent student can borrow from the government for their entire undergraduate education is $31,000. Private student loan limits vary with each lender, but you can typically borrow up to the full cost of attendance, minus any financial aid received.

Choice of Fixed or Variable Interest Rates

Federal loans only offer fixed-rate loans, while private lenders usually give you a choice between fixed or variable interest rates. Fixed rates remain the same over the life of the loans, whereas variable rates can change throughout the loan term, depending on benchmark rates.

Variable-rate loans usually have lower starting interest rates than fixed-rate loans. If you can afford to pay off your student loans quickly, you might pay less interest with a variable-rate loan from a private lender than a fixed-rate federal loan.

Quick Application Process

While federal student loans require borrowers to fill out the Free Application for Federal Student Aid, or FAFSA, private student loans do not. You can apply for most private student loans online in just a few minutes without providing nearly as much information.
In some cases, you can get a lending decision within 72 hours. By comparison, it typically takes one to three days for the government to process the FAFSA if you submit electronically, and seven to 10 days if you mail in the form.

Options for International Students

While you never want to default on your student loans (since it can cause significant damage to your credit), it can be nice to know that private student loans come with a statute of limitations. This is a set period of time that lenders have to take you to court to recoup the debt after you default. The time frame varies by state, but it can range anywhere from three to 10 years. After that period ends, lenders have limited options to collect from you.

However, that’s not the case with federal student loans. You must eventually repay your loans, and the government can even garnish your wages and tax refunds until you do.

Options for International Students

International students typically don’t qualify for federal financial aid, including federal student loans. Some private lenders, however, will provide student loans to non-U.S. citizens who meet specific criteria, such as attending an eligible college on at least a half-time basis, having a valid student visa, and/or adding a U.S. citizen as a cosigner.

When we say no fees required we mean it.
No late fees
when you take out a student loan with SoFi.

The Disadvantages of Private Student Loans

Private student loans also have some downsides. Here are some to keep in mind.

May Require a Cosigner

Most high school and college students don’t make enough income or have a strong credit history to qualify for private student loans on their own. Though some lenders will take grades and income potential into consideration, most students need a cosigner to qualify for a private student loan. Your cosigner is legally responsible for your student debt, and any missed payments can negatively affect their credit. If you can’t repay your loans, your cosigner is responsible for the entire amount.

The good news is that some private student loans allow for a cosigner release.That means that after you make a certain number of on-time payments, you can apply to have the cosigner removed from the loan.

Less Flexible Repayment Options

Federal student loans offer several different types of repayment plans, including income-driven repayment (IDR) plans, which calculate your monthly payment as a percentage of your income.

With private student loans, on the other hand, usually the only way to reduce your monthly payment is to refinance the loan to a lower interest rate, a longer repayment term, or both. Keep in mind that by lowering your monthly payment via a longer repayment period, you’ll typically end up paying more in interest over the life of the loan.

No Loan Forgiveness Programs

Federal student loans come with a few different forgiveness programs, including Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness. While these programs have strict eligibility requirements, they can help many low-income borrowers. Private lenders, on the other hand, generally don’t offer programs that forgive your debt after meeting certain requirements.

If you’re experiencing financial hardship, however, the lender may agree to temporarily lower your payments, waive a payment, or shift to interest-only payments.

Can Lead to Over-Borrowing

Private loans typically allow you to borrow up to 100% of your cost of attendance, minus other aid you’ve already received. Just because you can borrow that much, however, doesn’t necessarily mean you should. Borrowing the maximum incurs more interest over the duration of your loans and increases your payments, which can make repayment more difficult.

Recommended: How to Save Money in College

No Federal Subsidy

Subsidized federal student loans, awarded based on financial need, come with an interest subsidy, meaning the government pays your interest while you’re in school and for six months after you graduate. This can add up to a significant savings.

Subsidies don’t exist with private student loans. Interest accrues from Day One, and in some cases, you might need to make interest payments while still in school. If you don’t pay the interest as you go, it’s added to your debt as capitalized interest when you finish school. (This is also the case with federal unsubsidized loans.)

Federal vs Private Student Loans

Here’s a look at the key differences between federal vs. private student loans.

Federal Student Loans vs. Private Student Loans

The Application Process

Federal student loans are awarded as a part of a student’s financial aid package. In order to apply for federal student loans, students must fill out the FAFSA each year. No credit check is needed to qualify.

To apply for private student loans, students need to fill out an application directly with their preferred lender. Application requirements vary depending on the lender. A credit check is typically required.

Recommended: Financial Aid vs Student Loans

Interest Rates

The interest rates on federal student loans are fixed and are set annually by Congress. Once you’ve taken out a federal loan, your interest rate is locked for the life of the loan.

For the 2025-2026 school year, the federal student loan interest rate is 6.39% for Direct Subsidized and Unsubsidized Loans for undergraduates, 7.94% for Direct Unsubsidized Loans for graduate and professional students, and 8.94% for Direct PLUS loans for parents and graduate or professional students.

Private lenders, on the other hand, are free to set interest rates. Rates may be fixed or variable and depend on several factors, including your (or your cosigner’s) credit score, loan amount, and chosen repayment term. Private student loan rates may start as low as 3.47%, according to the Education Data Initiative.

Repayment Plans

Borrowers with federal student loans can select from several different federal repayment plans , including income-driven repayment plans. You can defer payments while enrolled at least half-time and immediately after graduation.

Repayment plans for private loans are set by the individual lender. Many private student loan lenders allow you to defer payments during school and for six months after graduation. They also have a variety of repayment terms, often ranging from five to 20 years.

Keep in mind that for federal student loans, access to all income-based plans is currently cut off for new borrowers while the Trump administration reevaluates.

Options for Deferment or Forbearance

Federal student loan borrowers can apply for deferment or forbearance if they encounter financial difficulties while they are repaying their loans. These options allow borrowers to pause their loan payments (interest, however, will typically continue to accrue).

Some private lenders may offer options for borrowers who are facing financial difficulties, including short periods of deferment or forbearance. Some also offer unemployment protection, which allows qualifying borrowers who have lost their job through no fault of their own to modify payments on their student loans.

Loan Forgiveness

Borrowers with federal student loans might be able to pursue loan forgiveness through federal programs such as PSLF or Teacher Loan Forgiveness, or after paying down their balances on an IDR plan for a certain period of time.

Since private student loans aren’t controlled by the government, they are not eligible for federal loan forgiveness programs. Though private lenders will often work with borrowers to avoid default, private student loans are rarely forgiven. Generally, it only happens if the borrower becomes permanently disabled or dies, but even then it is up to the specific lender.

Should You Consider Private Student Loans?

There are many different types of student loans. It’s generally a good idea to maximize federal student loans before turning to private student loans. That way, you’ll have access to income-driven repayment plans, loan forgiveness programs, and extended deferment and forbearance periods.

If you still need money to cover tuition or other expenses, and you (or your cosigner) have strong credit, a private student loan can make sense.

Private student loans can also be useful if your expenses suddenly go up and you’ve already maxed out federal student loans, since they allow you to access additional funding relatively quickly. You might also consider a private student loan if you don’t qualify for federal loans. If you’re an international student, for example, a private loan may be your only college funding option.

Another scenario where private student loans can make sense is if you only plan to take out the loan short-term. If you’ll be able to repay the loan over a few years, private student loans could end up costing less overall.

Recommended: When to Apply for Student Loans

How to Get a Private Student Loan

Here’s a look at the steps involved in getting a private student loan.

1. Shop around. Your school may have a list of preferred lenders, but you’re not restricted to this list. You can also do your own research to find top lenders. As you evaluate lenders, consider factors like interest rates, how much you can borrow, the loan term, when you must start repayment, any fees, and if the lender offers any hardship programs.

2. See if you can prequalify. Some lenders allow borrowers to get a quote by filling out a prequalification application. This generally involves a soft credit inquiry (which won’t impact your credit score) and tells you what interest rates and terms you may qualify for. Completing this step can help you decide if you need a cosigner.

3. Gather your information. To officially apply for a private student loan, you typically need to provide your Social Security number, birthdate, and home address, as well as proof of employment and income. You may also need to provide other financial information, such as your assets, rent or mortgage, and tax returns. If you have a cosigner, you’ll have to provide their personal and financial details as well.

4. Submit your application. Once you’ve completed your application, the lender will typically contact your school to verify your information and eligibility. They will then process the student loan and notify you about your approval and disbursement of your money.

💡 Quick Tip: Parents and sponsors with strong credit and income may find much lower rates on no-fee private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.

Does Everyone Get Approved for Private Student Loans?

No, not everyone gets approved for private student loans. Lenders assess various factors to determine eligibility, such as credit history and income. Students with limited credit history may need a cosigner to qualify. Here are the key factors lenders consider:

• Credit score

• Income and employment status

• Debt-to-income ratio

• Cosigner’s creditworthiness

• Enrollment status at an eligible school

If you don’t meet these qualifications, you can apply with a cosigner who does.

Apply for a Private Student Loan with SoFi

Private student loans are offered by banks, credit unions, and online lenders to help college students cover their educational expenses. They are not part of the federal student loan program, and generally do not feature the flexible repayment terms or borrower protections offered by federal student loans.
However, private student loans come with higher loan limits, and the borrowing costs are sometimes lower compared to their federal counterparts.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

Why would someone get a private student loan?

Students typically turn to private student loans when federal loans won’t cover all of their costs. Private student loans come with higher borrowing limits than their federal counterparts. The aggregate max dependent students can borrow from the government for their entire undergraduate education is $31,000, which is sometimes not nearly enough to cover the cost of attendance.

With private loans, on the other hand, you can typically borrow up to the total cost of attendance, minus any financial aid received, every year. This gives you more flexibility to get the financing you need. Keep in mind, though, that private student loans do not come with the same federal protections and benefits offered by federal student loans.

Will private student loans be forgiven?

Private student loans aren’t funded by the government, so they don’t offer the same forgiveness programs. In fact, private student loan forgiveness is rare.

If you experience financial hardship, however, many lenders will work with you to stay out of default. They may agree to temporarily lower your payments, waive a payment, or switch to interest-only payments. Or, you might qualify for deferment or forbearance, which temporarily postpones your payments (though interest continues to accrue).

Are private student loans paid to you or the school?

Private student loans are typically disbursed directly to the school to cover tuition, fees, and other educational expenses. Any remaining funds after those costs are covered are then refunded to the student, which can be used for additional expenses like housing, textbooks, and personal living costs.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Student Loan Refinance
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SOISL-Q125-021

Mar

2025

Are You a Shopaholic? Signs to Know

By Stacey Leasca | Budgeting & Goals, money | Comments Off

People shop for all kinds of reasons — to acquire the things they need or want, to browse stores for new and interesting finds, and (sometimes) for the little thrill that comes with snagging a great deal.

For some people, however, shopping crosses the line into unhealthy territory. If you tend to hit the stores every weekend, spend the majority of free time planning for and making purchases, and/or have have tallied up some major debt as a result of your frequent shopping, you may actually be addicted to shopping.

Read on to learn more about what it means to be a shopaholic, signs that you may be addicted to shopping, and ways to curb the habit.

Key Points

• A preoccupation with shopping and buying to relieve stress are hallmarks of shopping addiction.

• Spending beyond one’s budget and accumulating unopened goods are common.

• Individuals often hide purchases and feel guilt and regret after shopping.

• Shopping addiction can lead to financial strain and emotional distress.

• Managing compulsive shopping involves tracking triggers, finding alternatives, and seeking professional help.

Definition of a Shopaholic

Known as oniomania or compulsive shopping, shopping addiction is a behavioral disorder that involves frequent, excessive buying as a way to feel good and temporarily relieve feelings of stress, anxiety, or boredom. Like other types of addictions, a shopping addiction can substantially harm a person’s life, including their relationships and financial well-being.

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4 Shopaholic Symptoms

People who are addicted to shopping often get a sense of emotional relief right after buying something. Shopaholics also tend to spend more time and money on shopping than they can afford, and many get into financial problems — such as large amounts of credit card debt — as a result of their overspending.

Below are four signs that you may be addicted to shopping.

1. Experiencing a Rush of Excitement When You Buy

Shopaholics generally shop not because they really need something but rather for the sense of euphoria they experience when they’re shopping.

Similar to a drug addiction, compulsive shoppers will often experience a “high” or an adrenaline rush from the act of purchasing something. The brain then associates shopping with this pleasure and the person wants to try and recreate that feeling over and over again. This pattern can be used by a shopaholic to fill an emotional need or override a negative emotion.

2. Experiencing Post-Shopping Regret

Unfortunately, the high shopaholics experience is typically short-lived and later gets replaced by negative feelings, including shame, remorse, and guilt.

Shopaholics will often feel guilty after spending money, whether they splurged on something expensive or snagged something on clearance. Despite any remorse that follows, though, they tend to be good at rationalizing any purchase if they’re challenged.

Buyer’s remorse can force a shopaholic back into a negative cycle, since they know shopping is a surefire way to chase away negative feelings, at least temporarily.

3. Accumulating Unopened Goods

Though shopaholics enjoy shopping, they often don’t care all that much about their purchases when they get home or when their online orders arrive in the mail. In fact, the items they purchase often end up unopened and shoved in the closet or under the bed.

Those living with a shopping addiction can actually develop hoarding tendencies as they accumulate more goods than they need and yet continue buying.

Recommended: 9 Questions to Ask Before You Buy Something

4. Concealing Shopping Habits

Shopaholics will often try to conceal their shopping habits from their spouses, family members, coworkers, and friends. This is often due to feelings of shame and/or the fact that they are shopping and spending money at the expense of their job or loved ones.

Normal Shopping vs Compulsive Shopping

If you enjoy shopping and make the occasional splurge, does that mean you are a shopaholic? Not necessarily. There are several distinct differences between normal shopping and compulsive shopping. Here’s a side-by-side comparison of normal shopping versus compulsive shopping.

Normal Shopping	Compulsive Shopping
No addictive or compulsive component	Resembles addictive behavior
Purchases are generally needed and used	Purchases are often not needed and go unused
Isn’t followed by negative emotions	Often followed by guilt, remorse, and shame
Does not lead to financial problems	Continues despite negative financial consequences
No secrecy involved	Secrecy is often involved
Occasional shopping sprees	Frequent overbuying

Treating Compulsive Shopping

If you feel like shopping has become your main way of coping with stress, there’s a lot you can do to address the issue and regain control of your spending. Here are some strategies to try.

Understanding Your Triggers

Consider keeping a journal of how you feel when the shopping urge hits: Are you bored? Angry? Anxious? Do you feel the desire to buy new things after you hang out with a certain person, spend time on social media, scroll your email, or watch certain shows?

Tracking your triggers can provide insight into what drives you to want to shop and how you can better manage (or avoid) those triggers in the future. For example, you might seek out other friends, unsubscribe from marketing emails, and unfollow shopping-focused social media accounts.

Developing Other Coping Strategies

Overcoming any addiction typically requires learning alternative ways of handling the stress of everyday life. You might come up with a list of non-shopping activities you find relaxing and enjoyable, such as calling a friend, watching a movie, reading, going for a walk, listening to music, doing yoga, or engaging in a hobby. You can consult your list when you get the overwhelming urge to shop. This can help you break the cycle of using shopping as a way of trying to feel better about yourself.

Delaying Gratification

Another way to deal with impulsive or compulsive shopping is to establish a waiting time before you spend money on anything nonessential. “Combat the urge to impulse spend by instituting a holding period on all purchases,” suggests Brian Walsh, CFP® and Head of Advice & Planning at SoFi. “Before hitting the buy button, wait 24 to 48 hours. After the holding period, come back to the shopping cart and reevaluate. In some cases, you might not even remember why you wanted it in the first place.”

Seeking Expert Help

If you think you may be addicted to shopping and can’t seem to get a handle on it on your own, it can be worth seeking professional help.
A mental health professional can help you understand the emotional roots and psychological factors contributing to your compulsive shopping. Addiction therapy, including cognitive behavioral therapy (CBT), can help you understand your triggers and come up with coping strategies that don’t involve shopping.

You might also benefit from financial counseling, particularly if your shopping behavior has left you in debt. A financial advisor can help you set up a spending budget that allows you to pay off expensive debt, while also building — or rebuilding — your savings.

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Financial Consequences of Compulsive Shopping

Many compulsive shoppers continue making purchases even when they struggle to pay bills, max out credit cards, or face financial hardship. This behavior can create a cycle of stress and anxiety, reinforcing their shopping addiction.

Key financial consequences of compulsive shopping include:

• Excessive debt: Constant impulsive purchases can quickly accumulate, causing you to spend beyond what you can pay off at the end of the month and mounting overwhelming credit card debt.

• Poor financial decisions: Compulsive shoppers may neglect essential financial planning, fall for scams, or buy unnecessary items instead of prioritizing needs.

• Damaged credit score: High credit utilization and any missed payments can have a negative impact on your credit profile, making it difficult to secure loans, mortgages, or even rent an apartment.

• Depleted savings: Continuous spending on nonessential items can drain your savings account, leaving little to no financial cushion for emergencies.

• Bankruptcy risk: In extreme cases, uncontrolled debt from compulsive shopping may lead to bankruptcy, further complicating financial recovery.

How to Support a Loved One Struggling with Shopping Addiction

Supporting a loved one with a shopping addiction requires patience, empathy, and constructive action. You might start by having an open, non-judgmental conversation about their behavior, expressing concern without blame. You could also offer some helpful suggestions, such as tracking their spending habits, avoiding triggers, and (possibly) seeking professional help like therapy or support groups.

At the same time it’s important to set healthy boundaries and to avoid enabling their behavior by lending money or covering debts. Instead, you might offer alternatives like budgeting together or engaging in non-shopping-related activities. If they’re open to it, you could help them set financial goals and spending limits or offer to be their accountability partner.

Letting Your Savings Grow With SoFi

If your goal is to start saving more and spending less, you’ll want to choose a bank account that helps your money grow faster than it could in a traditional savings account and charges minimal or no fees.

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

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

FAQ

What are the signs of being a shopaholic?

Signs of a shopping addiction include frequent impulsive purchases, spending beyond one’s budget, hiding purchases from family or friends, feeling guilt or regret after shopping, and using shopping as a way to cope with stress or emotions. Shopaholics may also experience financial strain, accumulate debt, and have difficulty controlling their shopping urges.

What is the root cause of shopping addiction?

Negative feelings, such as stress, anxiety, and loneliness, are often the underlying causes of shopping addiction. Shopping can provide a distraction from these unpleasant emotions and help you feel more in control. It can also elicit a kind of psychological “high,” which is why compulsive shoppers often seek this behavior out again and again.

How do you cure a shopping addiction?

People who are addicted to shopping often respond well to various treatments, including antidepressant medications, talk therapy, cognitive-behavioral therapy (CBT), self-help books, support groups, and financial counseling.

Are there support groups for compulsive shoppers?

Yes, support groups like Shopaholics Anonymous and Debtors Anonymous provide help for compulsive shoppers. These groups are available in-person and online and offer a safe space to share experiences, gain support, and learn coping strategies from others facing similar challenges. These groups can also help you determine when you might need additional help from a mental health professional.

How can I prevent relapse after overcoming shopping addiction?

Preventing relapse involves maintaining strong financial habits, avoiding triggers, and developing alternative coping mechanisms for stress or emotions. Some strategies that can help you stay on track include regularly reviewing your budget, using shopping lists, implementing a waiting period before making purchases to help control impulses, and engaging in non-shopping activities (like hobbies or volunteering). You might also seek out ongoing support from therapy, accountability partners, or support groups.

SOBNK-Q125-082

Feb

2025

Can You Negotiate Rent?

By Brian O'Connell | Budgeting & Goals, money | Comments Off

If you’re wondering whether you can lower your rent, the answer may be yes in some situations.

The prospect of bargaining down your rent may sound futile or intimidating. But, thanks to a little research and a well-planned approach, it may be possible to land a better deal.

The odds of successfully lowering your rent will probably depend on a few factors, including how much comparable rentals in your area cost, the value you represent to your landlord, and the general state of the economy and the rental market. Learn effective negotiating techniques here.

Key Points

• Negotiating rent can be a common part of the landlord-tenant relationship and might lead to significant savings for tenants.

• Timing negotiation during slow rental periods can increase success.

• Highlighting one’s value as a tenant can strengthen a negotiation position.

• Offering a lump sum payment or longer lease term can improve leverage.

• If rent reduction is not possible, consider asking for alternative perks.

The Benefits of Negotiating Rent

The obvious payoff of reducing your rent is more cash left over at the end of the month.

But you may also want to consider the longer term benefits. Say you’ve successfully negotiated your monthly rent down by $100. Over the course of a year, that monthly savings adds up to $1,200. There are many benefits to that:

• If you applied that $1,200 yearly savings to paying down credit cards or a student loan debt (rather than paying the minimum), you might be able to save significantly on interest payments and also build your credit score. That last factor could help you save money in the future by helping you to get loans and credit cards with better terms.

• You could funnel that monthly $100 saved into a high-yield savings account (these are often offered at online banks) and start building a down payment on a home (if you’d prefer to own vs. rent) or an emergency fund or working towards another savings goal.

• If you were to transfer money (the extra $100) into your 401(k) retirement fund or other retirement savings each month, it could yield a significant income stream decades from now. (If you’re already contributing to these accounts, be aware of the annual limits.)

In addition, by learning how to negotiate, you’re also developing a lifelong skill of standing up for yourself and cutting better deals as an experienced negotiator, which could pay off in other areas of your life.

9 Tips for Negotiating Rent

If you’re convinced of the value of negotiating and interested in giving it a try, here are some pointers to help you do so effectively. A quick word of caution: Simply saying “I can’t afford my rent” is unlikely to get your rent lowered. You want to illuminate for the landlord good reasons to reduce what you pay and keep you as a valued tenant.

1. Time it Right

Here’s an important tip for how to negotiate rent: As eager as you may want to cut a good deal and do so as quickly as possible, it can be wise to time your approach to maximize your chances of success.

That means negotiating at the right moments, when your landlord may be more amenable to cutting a deal.

Those times might include:

• The end of the month, when other tenants may have vacated the property and your landlord may enjoy the stability of a long-term tenant.

• 90 days or so before your current lease expires. That’s enough time to offer to sign another lease, but only at terms favorable to you. If you’ve been a good tenant, and the market is soft for new tenants, your odds of renegotiating a lower rent may be stronger.

• At the beginning of the calendar year. Typically, winter is a slow time for property rentals, especially in the colder climates when moving is more difficult, and it may be harder for landlords to find new tenants. Stepping into the vacuum with an offer to stay another year (even at a lower monthly rental price) might give you some new-found leverage.

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2. Do Your Market Research

The next pointer on how to haggle rent: To build your case when approaching your property owner about a rental reduction, it can help to know the lay of the land.

If you can prove that you could live more inexpensively in a nearby rental based on local housing trends, your landlord may be more inclined to grant a discount, rather than lose your business to the competition.

For that reason, it’s a good idea to do a little digging, consider the cost of living, and comb through online listings to find out the rents of comparable units or properties in the area.

If, however, you are living in an area with a tight housing market, this tactic may not yield the results you hoped for.

Perhaps a similar one-bedroom apartment for rent has an amenity that’s not offered at the apartment you’re currently in or considering. You might point out how these factors make the landlord’s current rental terms somewhat higher than the going market rate.

When you speak to the landlord, it may help to have data on comparable apartments that are slightly lower in rent and, if the unit has been unoccupied, have this information on hand as well.
You may also want to check what other apartments in the same complex or rented out elsewhere by the same landlord currently cost. This can help keep you from overpaying for an apartment and may also help you negotiate a lower rent, which could mean automatic savings for you.

Recommended: Reasons to Switch Banks

3. Offer a Lump Sum

If you can afford it, adding a lump-sum payment (say, three months of rent upfront) may strengthen your bargaining power and boost your odds of reducing your overall rent payment.

That’s because many landlords prefer having rent in hand and not having to worry about late or no rental payment from tenants.

What’s more, offering an upfront, lump-sum payment is one way to show a landlord that you’re serious about being a solid tenant. A landlord may be more amenable to doing business with a tenant who is willing to go the extra mile.

4. Consider a Longer Lease

If you particularly like the house or apartment you’re renting, you might consider offering the landlord a longer lease in exchange for lower rent payments.

If, for example, a landlord is offering a 12-month lease to a new tenant, at a fixed monthly rental price, and you agree to extend that lease to 18 or 24 months, you might be in a stronger position to ask for a rental discount.

All things being equal, landlords tend to favor tenants who’ll be around for the long haul, and may be more likely to green-light a lower rent for a longer lease arrangement.

5. Cash in on a Referral

Landlords typically loathe empty apartments, so if you can help fill a rental unit with a referral or two, it might put you in a better negotiating position to ask for a rental price deduction for helping out.

Rental unit owners usually have to pay for classified ads to lease their open units. In addition, landlords often have to put some sweat equity into showing units, chasing down tenant leads, and vetting potential lease applicants.

By bringing your landlord qualified, stable tenants, you may be able to become a valuable asset for your landlord. This in turn can help build a more robust case for a rental deduction in the process.

6. Don’t Just Focus on Price

When working on how to negotiate rent, yes, the primary goal in a rental negotiation is to bring the price down.

But in case that conversation proves fruitless, you may also want to consider some other perks or benefits you could ask for in lieu or a rent reduction.

Some ideas:

A prime parking space (especially in urban areas)

• New appliances and/or fixtures in your home or apartment

• New or larger storage space

• “First dibs” on better apartments or homes in your complex, once they free up

• A waiver of fees and charges on things like gym memberships, parking privileges, community rooms, water or trash removal, or other services and amenities

• Extra parking passes for guests

• Allowing you sublet for the summer (if you plan to be away)

• One or two months free

Recommended: Passive Income Ideas to Build Wealth

7. Give Your Landlord a Heads-Up

Nobody likes to be ambushed on financial matters. That’s why you might have more success if you call your landlord well ahead of when you need to sign the lease. Politely let them know that you’d like to discuss the terms of the lease and are wondering if they would be open to a price reduction.

You might then suggest having a meeting (in person tends to be best, since it can be harder to say “no” to someone when you’re sitting face-to-face) some time in the next week or two.

This gives your landlord some time to consider the situation while also giving you some time to build your case.

In addition, giving your landlord some lead time shows you’ve put some thought into the matter. It also shows you respect your landlord’s time and schedule.

Keep in mind that you have a right as a renter to negotiate rent, but being diplomatic and respectful to your landlord will likely yield a better result than being aggressive.

8. Highlight Your Value as a Tenant

When you do meet with your landlord to negotiate the terms of your lease, it can be helpful to make a good case for keeping you on (or bringing you in) as a tenant.

For example, you might want to have a record of all your on-time payments or any history of providing referrals for this landlord.

You may also want to mention your willingness to extend your lease, that you’re courteous to other tenants, keep the property in good shape, and any other points in your favor.

Any and all of these factors could help persuade your landlord to give you a better deal.

Get Your New Rental Agreement in Writing

If you’ve successfully negotiated your rent downward or otherwise improved the terms of your lease and have a verbal agreement, it’s a good idea to get the deal in writing.

Having both parties sign off on the new rental agreement provides you with proof that you have a new deal in place, in the event there is any misunderstanding down the road. Congratulations: Getting a rent reduction can give you some breathing room in your budget.

The Takeaway

While rental leases may appear set in stone, they’re more flexible than many tenants think, especially if the rental market is soft in your area (meaning more rentals than renters). You may be able to negotiate a better price if you negotiate well, showing that the rent is higher than similar units in the area and that you are a model tenant who pays rent on time. If you’re successful, you could wind up with more money in your bank account.

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

FAQ

Can you negotiate apartment rent?

You may be able to negotiate rent on an apartment or home; the possibility varies depending on your situation. You may be more likely to succeed in negotiating your rent if you can show that comparable rents in your area are lower and that you are a reliable tenant.

Can I pay my rent in a lump sum for a discount?

It’s possible that some landlords will accept rent in a lump sum at a discounted rate. This can have benefits: The landlord gets the cash upfront and doesn’t have to worry about potentially chasing a tenant for a past-due payment. But you would need to make this request from the landlord and hear their response.

When is the best time to negotiate rent?

There are a few times when you may have better luck negotiating rent. Those times include the end of the month, when many other tenants may be moving out; 90 days before your lease expires, which is when renewals are typically made available; and the start of a new year, when people may be moving and, since it’s winter, new tenants could be harder to find.

Is it in bad faith to negotiate rent?

It is usually not considered in bad faith to negotiate rent, provided it is done reasonably, respectfully, and honestly. It’s a practice that does take place in the rental market. That said, if a person were to invent reasons for a rent reduction, such as claiming the appliances don’t work when they do, that would be acting in bad faith.

Can a landlord kick me out if I try to negotiate my rent?

A landlord usually cannot kick you out for trying to negotiate rent. This is considered a typical aspect of the landlord-tenant relationship. In order to evict a tenant, the landlord must follow the guidelines for this process determined by the state. Causes for eviction might be non-payment of rent or violating the terms of the lease, such as damaging the property.

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

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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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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This article is not intended to be legal advice. Please consult an attorney for advice.

SOBNK-Q125-079

Feb

2025

Different Types of Savings Accounts You Can Have

By Julia Califano | Budgeting & Goals, member | Comments Off

If you’re looking to put money aside for future needs and watch it grow, a savings account can be a great option. However, not all savings accounts are created equal. There are actually several different types to choose from, and the best choice for you will depend on your goals, how you want to access your money, and how soon you’ll need it.

If you’re looking for easy, in-person access to your savings, for example, you might like a traditional savings account. If getting a high return is your priority, a high-yield savings account, certificate of deposit (CD), or online bank account may be a better option. There are also speciality accounts for longer-term savings goals like retirement.

Here’s the lowdown on the different types of savings accounts to have and how to choose the best one (or ones) for your needs.

Key Points

• Different types of savings accounts cater to different needs and goals and each has pros and cons.

• Traditional savings accounts provide easy access and are typically insured up to $250,000.

• Online savings accounts often offer higher interest rates due to lower operational costs.

• CDs lock you money up for a set period of time but generally offer higher interest rates than traditional savings accounts.

• Money market accounts combine features of savings and checking accounts, often including check-writing privileges and higher interest rates.

Common Types of Savings Accounts

When you’re choosing between the different types of savings accounts, it’s helpful to understand how they work. While there are many differences between the accounts listed below, one thing they generally have in common is access to online banking. According to SoFi’s April 2024 Banking Survey of 500 U.S. adults, 48% of survey respondents use online banking daily, and 26% use it several times a week.

Traditional Savings Account

Many people start their savings journey by opening a traditional savings account at the same bank where they have a checking account. SoFi’s data found that 71% of respondents with a bank account have a savings account.

If your bank is insured by the Federal Deposit Insurance Corporation (FDIC), then your deposits are insured for up to $250,000 per depositor, per account category, per insured institution. The National Credit Union Administration (NCUA) provides similar insurance for credit unions.

You can typically open a basic savings account with a small minimum deposit. And, while the interest rates on these accounts tend to be low compared to other savings options, they offer fairly easy access to your funds. Just keep in mind that some institutions limit “convenient” transactions (those made by check, debit card, or online) on savings accounts to six per month, and will charge a fee if you exceed the limit. However, there are generally no restrictions on the number of in-person withdrawals and transfers (at the teller or ATM) you can make on a basic savings account.

Online Savings Account

Brick–and–mortar financial institutions aren’t the only place where you can shop for a savings account. If you’re comfortable doing your banking online or from your mobile device, you might consider an online bank for your savings account.

Because online-only financial institutions tend to have lower overhead costs than traditional banks, they often pass that savings on to customers in the form of higher interest rates and lower, or no, fees.

While you can’t meet with a bank representative face-to-face, these accounts often come with well-designed and user-friendly websites and mobile apps, along with customer service representatives available via online chat and by phone.

Like basic savings accounts, online savings accounts may have restrictions on the number of transactions you can make per month without incurring a penalty fee.

If you choose an online savings account from an institution with FDIC insurance, then your funds will be protected, even if the online bank were to go out of business.

High-Yield Savings Account

Also known as high-interest savings accounts, this type of savings vehicle tends to come with higher interest rates than traditional savings accounts and often lower fees. They are primarily offered by online-focused banks and credit unions and, as a result, some consumers aren’t aware they exist. According to SoFi’s survey, just 59% of adults know what a high-yield savings account is and only 23% have one.

Depending on the financial institution, a high-yield savings account will likely be insured by the FDIC or NCUA up to $250,000 per depositor, per account category, per insured institution, or possibly more.

Like other savings accounts, withdrawals from high-yield savings accounts may be limited to six per month, and going over the withdrawal limit may trigger a fee. Of the 55% of people in SoFi’s survey who say they have switched banks, 29% did so because they wanted lower fees.

Learn more: Basics of High Yield Savings Accounts

Money Market Account

A money market account (MMA) is a type of savings account that also offers some of the features of a checking account. Like a regular savings account, MMAs pay interest on your balance (often at a higher rate than a traditional savings account). Like a checking account, MMAs offer checking-writing privileges and/or debit cards, making it easy to access your funds.

On the downside, money market funds generally require a much larger initial deposit than a basic savings account. And, you could be charged fees if the balance goes below a minimum amount.

Due to the potentially higher interest rates and check-writing/debit access, money market accounts can be a good choice for emergency funds if you’ve already saved enough to meet the initial deposit.

It can be important to know the distinction between money market accounts vs. money market funds, too. The latter is a type of investment account and not guaranteed by the FDIC or NCUA.

Certificate of Deposit (CD)

Certificates of deposit, or CDs, can be a good savings tool if you don’t need quick access to your money. This type of savings account comes with a specific term — often between three months and five years — during which you need to keep your money in the account.

In return for leaving your money untouched for that time period, CDs generally offer higher returns than standard savings accounts. Generally, the longer term, the higher the interest rate — but that is not always the case.

While savings and money market accounts pay variable interest rates (meaning your rate can change after you’ve opened the account) CDs typically pay fixed rates, so your rate is likely to be locked in once you’ve deposited the cash. You’ll know these funds are safe if they’re FDIC-insured. However, if you pull your cash before the maturity date, you will usually pay a penalty, which might mean losing any interest earned. (There are some no-penalty CDs, but the interest rate is probably lower than you’d otherwise earn.)

Cash Management Account

A cash management account (CMA) is an interest-bearing account that is usually offered by a brokerage firm, an investment firm, or a robo-advisor. These accounts typically combine the features of a savings account, checking account, and (in some cases) a brokerage account. Though they are not held by banks, they may be insured by the FDIC via a partner bank. Not all are, so be sure to check if you are thinking of opening one.

CMAs may offer higher interest rates than traditional savings accounts, along with check-writing privileges and a debit card. CMAs also typically provide easy transfers to brokerage accounts, where you can invest your funds. Keep in mind, however, that interest rates may not be as high as what you could earn in a high-yield savings account.

Speciality Savings Plans

The types of savings accounts listed above can be great places to build your emergency fund or save money for a downpayment on a house. But if you’re looking to save for a more specific or longer-term goal, such as retirement or a child’s future education, you may want to open a more specialized account.

Specialty savings accounts are designed to serve a specific financial goal. They can earn interest to help you grow your money, just like other savings accounts. Some of these accounts, however, are investment vehicles, which means they can yield higher returns over the long term, but may also involve some risk.

Among the most common specialty accounts are 529 college savings plans, 401(k)s and individual retirement accounts (IRAs), health savings accounts (HSAs), and custodial accounts for a child (which are savings accounts set up and administered by an adult for a minor).

Opening a specialty savings account can make sense if you have a singular purpose for saving money. You may want to keep in mind, however, that there may be restrictions on when and how you can withdraw those funds later. Some specialty accounts, such as IRAs, 529s and HSAs, have strict tax rules for making withdrawals.

The Takeaway

There are many different types of savings accounts, and the best option for you will likely depend on how and when you want to access your money.

You might like a traditional savings account if you want to bank in person. For better interest rates and lower fees, you might prefer an online high-yield savings account or, if you won’t need the money for a while, a CD.

For more specific savings goals, such as preparing for retirement, covering health expenses, or saving for your child’s education, you may want to open a specialty savings account in addition to a more liquid savings vehicle.

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FAQ

What type of account is best for savings?

There are different kinds of savings accounts that suit different goals and money styles. If you like banking in-person, a traditional bank might work fine. If you prefer the convenience of an online bank, you are likely to be rewarded with higher interest rates and lower fees. If you are saving for a specific goal, a specialty account might work best. For instance, a 529 account can be a good choice if you are stockpiling funds for a child’s future college tuition.

How do I choose a savings account?

Choosing a savings account depends on your needs and goals. If you are looking for an in-person banking relationship, a traditional savings account at a brick-and-mortar bank could work well. If you want a high-yield account and low fees, and don’t plan on making trips to a branch, an online bank’s offerings might better suit your needs. If you’re able to keep your money in an account for a specific time period and want to earn a guaranteed rate, consider a certificate of deposit (CD).

Is it better to have a savings account or invest?

This depends on your goals. A savings account is best for short-term needs and emergencies. These accounts offer safety and easy access, but lower returns. Investing is generally better for long-term goals, since it can offer potentially higher returns over time. However, investing comes with risks, particularly in the short-term. Ideally, you want to have both — a savings account for short-term needs and goals and an investment account to help build future wealth.

About the author

Julia Califano

Julia Califano is an award-winning journalist who covers banking, small business, personal loans, student loans, and other money issues for SoFi. She has over 20 years of experience writing about personal finance and lifestyle topics. Read full bio.

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