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Posted on April 17, 2021

What Are Round-Up Savings?

Round-ups are a feature offered by some financial services companies in which each time a customer makes a transaction, that amount is rounded up to the nearest dollar, and the change is deposited into a savings or investment account.

Once upon a time, people saved up their spare change in jars, cashing their coins in for a tidy sum once the jar was full.

And while the notion of that old coin jar may seem quaint now, there’s a new cashless version of that old tradition. It’s called round-ups.

The theory behind coin jars is as simple as can be.

Back when cash and coins were the most standard form of payment, savers would accumulate change throughout the day—paying for their morning coffee, buying lunch, or making other small routine purchases.

At the end of the day, they’d empty their pockets of coins and deposit all that loose change into a jar, where it would accumulate over time into a more sizable sum.

Once the jar was full, that money would be deposited into a savings account.

How Does Round-Up Savings Work?

Much like the cash jars of yore, round-up savings are also based on the principle that small amounts of money can add up to big savings over time.

For example, let’s say a round-up user makes a purchase for $28.15. If they were paying with cash, they’d have 85 cents remaining in change. With round-ups, the financial institution rounds up the value of the transaction and transfers those 85 cents into a savings account.

5 Types of Savings You Should Consider Having

Round-Up Savings Can Add Up

While saving 85 cents may not sound like much, any jar saver who ever went to the bank with $100 in change will attest that putting away small amounts can add up fast.

For example, saving just five extra dollars a week in round-ups adds up to $260 over the course of the year. This may not sound like a lot of money to save in total, but it can provide a nice boost to augment a more intentional savings strategy.

And that’s not the full amount someone could gain from participating in a round-up program.

Just like other savings or investments, round-ups deposited into a savings or an investment account have the potential to earn interest.

If the proceeds of round-up purchases are deposited to a savings account on a regular basis, that spare change would grow—and could continue growing—each time interest compounds.

For round-up investing, those small savings can, over time, help in the purchase of additional shares which may also grow in value.

Reasons For Considering Round-up Savings

Many Americans have trouble saving money.

For example, more than a third of U.S. adults would not have the extra funds to cover an unexpected $400 expense , and a quarter of Americans don’t have any retirement savings.

There are lots of reasons people have trouble saving—and for some, setting up round-ups can help them consistently set money away without having to think about it.

This can help to eliminate some of the pain and effort of saving.

Round-ups Make Everyday Transactions More Rewarding

One reason round-ups can be a useful tool to help someone stick save is that round-ups help someone pay themselves with each transaction.

Kind of like tipping oneself, round-ups pay the saver a little something extra on their transactions, making everyday spending a little more rewarding.

Round-ups are Automatic

Part of why saving can feel painful is that it requires the saver to make difficult decisions on a regular basis.

Each time money is put into a savings or investment account, the individual must consciously choose to save over other possible expenditures, decide how much to put away, and actually remember to perform the funds transfer.

But once they’re set up, round-ups happen automatically—without requiring conscious sacrifice.

Automating personal finances can be a helpful tactic to keep everyday funds flowing, avoid late fees and other stresses, and encourage healthy habits.

When it comes to automating savings, round-ups are yet another tool that can assist consumers in putting away small amounts of money.

Round-ups Take Some of the Pain Out of Saving

Saving money can be hard emotionally. In addition to the reasons mentioned above, each time an individual makes the decision to save they’re putting their future goals ahead of immediate pleasure.

That may be rewarding in the long run, but saving also typically requires an individual to make some sacrifices now. But because round-ups transfer such small amounts to savings on each transaction, people may not even feel a pinch.

For those who are already putting money into savings on a regular basis, taking advantage of round-up features can help to grow that money more rapidly, putting the ability to achieve your savings goals within even closer reach.

Round-ups May Help Counter Savings Procrastination

While some people save early and often, others may put it off. There are lots of reasons for procrastinating on starting a savings plan.

For those in their 20s, for example, retirement or even things like starting a family and buying a house can seem a long way off. Meanwhile, there can be lots of temptation to spend now, especially for those earning entry-level salaries.

SoFi Money®, account holders can enroll in the Round-up program, so long as they have at least one Vault set up. Vaults allow users to save for different goals within the same account. With the round-up program, transactions will be rounded up to the nearest dollar and deposited into the Vault selected by the account holder. There are also no fees and it’s possible to earn cashback when you spend.

Learn more about how SoFi Money can help you achieve your savings goals.

SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
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.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC . Neither SoFi nor its affiliates is a bank.
SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
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Source: sofi.com

Posted on April 16, 2021

Do I need a rainy day fund? – Lexington Law

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The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

When it comes to your finances, not every day can be rainbows and sunshine, and unexpected expenses can pop up more often than you’d like. While budgeting is an essential part of financial planning, sometimes setting aside money for unplanned expenses can go right over your head. To avoid going into debt over small inconveniences, setting aside money and putting it into a rainy day fund is crucial.                      

In this article, we’ll go over what a rainy day fund is, how it differs from an emergency fund and how much you should be saving. We will also give you tips on how you can save for those stormy days. 

What is a rainy day fund?

In 2019, 15 percent of adults said they would use a credit card a carry a balance to cover a $400 unexpected expense. Source: Federal Reserve.

The purpose of a rainy day fund is to have money set aside that is readily available for life’s unexpected financial situations that tend to occur outside of your normal living expenses. Whether you need to buy a new phone or have to pay for an unexpected car repair, a rainy day fund can help you cover the costs of these unplanned and inconvenient situations. 

If not accounted for, these costs can disrupt your monthly budget, which can in turn increase your chances of going into credit card debt. According to the Federal Reserve, 37 percent of adults said they could not or would not pay for a sudden $400 expense with cash or a cash equivalent, with 15 percent saying they would use a credit card and carry a balance to cover the costs (and 12 percent wouldn’t be able to pay by any means). 

Having a financial cushion such as a rainy day fund can help individuals afford the costs of these expenses and avoid racking up unnecessary debt.

Rainy day fund vs. emergency fund

Though they may seem similar, emergency funds and rainy day funds are not the same. Emergency funds are meant for larger financial emergencies and act as a financial safety net when things like a job loss or a sudden medical expense occurs. 

Should an emergency like this happen, you would have money to cover everyday expenses, such as rent, groceries, car payments and other recurring bills. Many experts recommend having at least three to six months’ worth of living expenses saved in an emergency fund, but this amount can differ depending on your circumstances. 

In simple terms, emergency funds are used for great financial hardships, while rainy day funds are used to cover smaller, unforeseen expenses. 

How much should you have in a rainy day fund? 

Saving for a rainy day fund can look different for everyone depending on their needs and lifestyle but having at least $500 to $1,000 saved is usually recommended. This amount should be able to cover smaller expenses that come up and help put your mind at ease whenever they occur. 

On average, you should aim to have $500 to $1,000 in your rainy day fund. Source: Lexington Law.

When forecasting your rainy day budget, consider any long-term expenses that could pop up. Do you have a pet that is nearing old age that may need to be taken to the vet any time soon? Maybe you have children and want to budget for those impromptu doctor’s office visits. Whatever your situation, a rainy day fund can be the umbrella that protects you from any unexpected financial storm. 

Where should I put my rainy day fund? 

Your rainy day fund should be liquid, meaning it is easily accessible to you and can be pulled out at any given moment, without any additional fees. Money market accounts, high-yield bank accounts and traditional savings accounts are all great options that can keep your money safe and accessible. Your rainy day fund should be kept separate from your other accounts, such as your emergency fund. Avoid tapping into your savings, as this money should only be used when small inconveniences arise. 

4 quick tips on saving for a rainy day fund

Saving for a rainy day fund can be fairly simple. Since these accounts are for smaller expenses and don’t require a hefty amount of cash, you can likely save up enough money within a year. Here are four quick saving tips to help get you started: 

1. Tighten up your budget 

As with any savings account, you want to take a hard look at your budget and see if you can afford to cut down some of your spending. For example, you can save money by eating out less and cooking at home more. You can also limit your coffee runs to only once a week as opposed to every day. This type of spending adds up, and by tightening up your budget a bit, you’ll be able to quickly put that money into your rainy day savings. 

2. Set up automatic transfers 

Automatic transfers are an easy way to put cash aside without even having to think about it. Set up an automatic transfer from your checking account to your savings account and determine a monthly amount that is feasible for your budget. Transferring $50 every month will put your savings account at $600 in one year.

Another option is a swipe-and-save feature, which most banks offer. Each time you swipe your debit card, your bank will automatically transfer $1—or any amount you choose—into your savings account. Though this may seem like a small amount, you’d be surprised how fast it can add up. 

3. Save your change

Saving your spare change and cash may seem old school, but it’s an extremely effective way to save for your rainy day fund. Extra cash from a birthday or holiday can go straight into a savings jar. Eventually, you can build up your cash savings and add it to your rainy day fund whenever the time is right.

4. Open a dedicated rainy day savings account

As mentioned, a high-yield savings account is a great option for storing your rainy day fund. Not only are these funds easily accessible, but you’re also able to earn interest on each deposit you make. Shop around for accounts that will make the most sense for you—keep interest, deposit requirements and fees in mind. If you don’t have to tap into your rainy day fund often, you can end up earning more money than you would in a traditional savings account. 

Though it’s impossible to prepare for all of life’s unexpected events, setting up a rainy day fund can help give you peace of mind should any financial storms come your way. Keep educating yourself on how to prepare for these life events to ensure that you keep your credit health in good standing. 

Reviewed by Anna Grozdanov, Associate Attorney at Lexington Law Firm. Written by Lexington Law.

Anna Grozdanov was born in Sofia, Bulgaria but moved to Arizona with her family. Ms. Grozdanov grew up in Arizona and went on to graduate Magna Cum Laude from the University of Arizona with a B.A. in both Philosophy and Psychology. Ms. Grozdanov finished her first year of law school at Pepperdine University School of Law in California, but returned to Arizona where she graduated from the Sandra Day O’Connor College of Law. Since graduating from law school, Ms. Grozdanov has worked in Estate Planning, Estate Administration, Probate, and Personal Injury. She has extensive experience advising and working closely with clients and applies these skills at Lexington by helping clients achieve their credit repair goals. Ms. Grozdanov is licensed to practice law in Arizona. She is located in the Phoenix office.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

Posted on April 15, 2021

Where Americans Are Most and Least Financially Literate – 2021 Edition

Where Americans Are Most and Least Financially Literate – 2021 Edition – SmartAsset

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Individuals with higher levels of financial literacy tend to adhere to better financial practices – such as having an emergency fund and planning for retirement – and are also more likely to build wealth further by investing in the stock market. Many Americans, however, lack financial knowledge and do not follow financial best practices. Less than 50% of American adults have set aside three months’ worth of emergency funds, only 41% have tried to figure out retirement savings needs and just 32% have investments apart from retirement accounts.

In light of Financial Literacy Month this April, SmartAsset took a closer look at financial literacy in the U.S. In this study, we discuss the growing number of states with financial education standards along with how adults fare when asked a series of economics and personal finance quiz questions. Using data from the Financial Industry Regulatory Authority (FINRA) Foundation, the Council for Economic Education and Experian, we then identify the states where residents are most and least financially literate. For details on our data sources and how we put all the information together to create our findings, check out the Data and Methodology section below.

Key Findings

  • A mismatch exists between perceived and tested financial literacy. The Financial Industry Regulatory Authority (FINRA) Foundation said in a recent national financial capability survey that roughly 71% of American adults believe they have a high level of financial literacy. However, when tested on personal finance topics, respondents struggle. On average, adults surveyed were able to answer only half of the literacy questions correctly.
  • Midwestern states perform well while Southern states fall behind. More than half of the 10 most financially literate states are in the Midwest: North Dakota, Minnesota, Nebraska, South Dakota, Kansas and Wisconsin. All of them rank in the top 10 states for our financial knowledge & education index. At the other end of the study, Southern states rank in the bottom 10: West Virginia, Louisiana, Georgia, Texas, Tennessee and Delaware. All of these except Tennessee rank in the bottom 20 states on our financial knowledge & education index.

Financial Education and Literacy in the U.S.

The number of states requiring that personal finance be included in their standards has grown substantially over the past two decades. According to data from the Council for Economic Education, only 21 states included personal finances in their K-12 standards in 1998, relative to 45 states in 2020. Notably, only some states additionally require that these standards be implemented by individual districts within the state. In 1998, 14 states required that personal finance K-12 standards be implemented, compared to 37 states in 2020.

Though the prevalence of financial education in the U.S. is growing, many adults struggle when asked to respond to questions covering fundamental concepts of economics and personal finance. The FINRA Foundation’s National Financial Capability Study asks respondents a series of six quiz questions, shown below. Multiple choice answers are shown below the questions. Correct answers are listed at the end of the study in the Data and Methodology section.

  • Mortgage Question: A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage, but the total interest paid over the life of the loan will be less.
    a) True
    b) False
  • Interest Rate Question: Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow?
    a) More than $102
    b) Exactly $102
    c) Less than $102
  • Inflation Question: Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, how much would you be able to buy with the money in this account?
    a) More than today
    b) Exactly the same
    c) Less than today
  • Risk Question: Buying a single company’s stock usually provides a safer return than a stock mutual fund.
    a) True
    b) False
  • Compound Interest in Debt Question: Suppose you owe $1,000 on a loan and the interest rate you are charged is 20% per year compounded annually. If you didn’t pay anything off, at this interest rate, how many years would it take for the amount you owe to double?
    a) Less than two years
    b) At least two years but less than five years
    c) At least five years but less than 10 years
    d) At least 10 years
  • Bond Price Question: If interest rates rise, what will typically happen to bond prices?
    a) They will rise
    b) They will fall
    c) They will stay the same
    d) There is no relationship between bond prices and the interest rate

On average, adults surveyed were able to answer only half (i.e. 3.0) of the above questions correctly. In fact, only 7% of adults were able to correctly answer all six questions. About 34% and 40% of surveyed adults were able to answer five and four questions, respectively. The compound interest in debt and bond price questions were the most difficult for respondents. Less than one in three respondents were able to correctly answer either question. Meanwhile, more than 70% of adults correctly answered both the mortgage and interest rate questions.

Notably, there are distinct differences in performance on the financial literacy quiz questions across different demographics according to education, income and race. The average number of correct quiz questions among individuals earning $75,000 or more and college graduates is 3.6 and 3.8, respectively. In contrast, individuals earning less than $25,000 and those with a high school education or less answered an average 2.2 and 2.3 questions correctly. The chart below breaks out survey respondents by race, showing the average number of correct answers for each group.

States Where Residents Are Most Financially Literate

North Dakota ranks as the state where residents are most financially literate, taking the top spot on our financial knowledge & education index and the third spot on our financial practices index. According to the Council for Economic Education, the state of North Dakota requires that personal finance coursework be integrated into another course in the K-12 curriculum. In 2018, residents correctly answered about 55% of the National Financial Capability quiz questions discussed previously – almost five percentage points higher than the national average.

Minnesota and New Hampshire follow closely behind North Dakota. Minnesota is the top-ranking state on our financial practices index and ranks fifth on our financial knowledge and education index. Minnesota residents have the highest average credit score (739) of any state and the eighth-highest percentage of adults who report paying their credit card bill in full monthly (58.04%).

Six of the remaining seven states where residents are most financially literate are located in the Midwest and West. They include Nebraska, South Dakota, Kansas and Wisconsin in the Midwest, plus Utah and Colorado in the West. All of these states require that personal finance be included in K-12 standards and survey adults rank within the top 12 of the study on FINRA’s financial literacy six-question quiz.

States Where Residents Are Least Financially Literate

West Virginia ranks as the state where residents are least financially literate, with the lowest financial knowledge & education index and third-lowest financial practices index. West Virginia ranks in the bottom five states for three of the seven individual metrics we considered: percentage of adults that believe they have a high level of financial knowledge (67.37%), average percentage of personal finance quiz questions answered correctly (46.79%) and percentage of adults with a three-month emergency fund (42.53%).

Like in West Virginia, Nevada residents fall particularly far behind on our financial knowledge and education index. Though the state includes personal finance in its K-12 standards, only about two in three adults believe they have a high level of financial knowledge, the ninth-lowest of all 50 states and the District of Columbia. Additionally, the average percentage of correctly answered economics and personal finance quiz questions for Nevada is 49.14%, ranking within the bottom 15 of the study.

Across the eight other states where residents are least financially literate, three are not in the South: Indiana, Alaska and Pennsylvania. Of those three, Indiana ranks lowest for both the financial knowledge and education category as well as the financial practices category. Across the seven metrics, Indiana ranks in the bottom five states for its percentage of adults with a three-month emergency fund (44.05%) and percentage of adults paying their credit card bill in full monthly (49.82%).

Data and Methodology

To find the states where Americans are most and least financially literate, we examined data for all 50 states and the District of Columbia across two categories that include seven individual metrics:

  • Financial knowledge and education. For our financial knowledge and education index, we analyzed the state’s financial education score, percentage of adults that believe they have a high level of financial knowledge and percentage of correctly answered personal finance quiz questions. The state’s financial education score comes from the Council for Economic Education. Data for the other two metrics comes from the Financial Industry Regulatory Authority (FINRA) Foundation’s 2018 National Financial Capability Study.
  • Financial practices. For our financial practices index, we analyzed average credit score, percentage of adults with a three-month emergency fund, percentage of adults paying their credit card bill in full monthly and percentage of adults regularly contributing to an IRA or 401(k). Average credit score figures come from Experian. Data for the other three metrics comes from the Financial Industry Regulatory Authority (FINRA) Foundation’s 2018 National Financial Capability Study.

We created our final rankings by first ranking each state for each individual metric. Then we averaged the rankings across the two categories listed above. For each category, the state with the highest average ranking got a score of 100. The state with the lowest average got a score of 0. Finally, we created our final ranking by finding each state’s average score across the two categories.

The answers to the FINRA Foundation NFCS quiz questions are as follows:

  • Mortgage Question – a) True
  • Interest Rate Question – a) More than $102
  • Inflation Question – c) Less than today
  • Risk Question – b) False
  • Compound Interest in Debt Question – b) At least two years but less than five years
  • Bond Price Question – b) They will fall

Tips for Improving Your Finances

  • Take advantage of compound interest. One of the most important things to note about saving is that it helps to start early. Waiting to invest can potentially decrease your total return on a potential investment. Compound interest is interest that’s generated from existing earnings. In other words, when you put money into a savings account earlier, the interest compounds. As a result, you earn interest on the money you initially invested as well as the interest that money has already made. To see how this works, take a look at our investment calculator.
  • Some kind of retirement account is better than none. If a 401(k) is not available through your job, consider an IRA. 401(k)s are often valued more than IRAs since there is a possibility that your employer will match your contributions to the plan up to a certain percentage of your salary. This means that if you choose not to contribute, you are essentially leaving money on the table. However, if your employer does not offer a 401(k) plan, an IRA is another great option. In 2020, the IRA contribution limit is $6,000 for people under 50 and $7,000 for people age 50 and older.
  • Consider working with a financial advisor. Investing and planning for retirement are complicated and difficult tasks. A financial advisor could help you manage your money smartly. SmartAsset’s free tool matches you with financial advisors in five minutes. If you’re ready to be matched with local advisors that may be able to help you achieve your financial goals, get started now.

Questions about our study? Contact us at press@smartasset.com.

Photo credit: ©iStock.com/Damir Khabirov

Stephanie Horan, CEPF® Stephanie Horan is a data journalist at SmartAsset. A Certified Educator of Personal Finance (CEPF®), she sources and analyzes data to write studies relating to a variety of topics including mortgage, retirement and budgeting. Before coming to SmartAsset, she worked as an analyst at an asset management firm. Stephanie graduated from Williams College with a degree in Mathematics. Originally from Philadelphia, she has always been a Yankees fan and currently lives in New York.
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Source: smartasset.com

Posted on April 6, 2021

Checking vs. Savings Accounts – What’s the Difference Between Them

The world is filled with places to put your money. Apps, cryptocurrency exchanges, and investment funds abound, trying to help you make the most of your money.

Most of us, however, need to start with just two basic types of bank accounts to keep our money in order: checking and savings. The features of checking and savings accounts are designed to encourage smart money management. But you can easily miss out on the benefits if you don’t know the best ways to use each one.

Learn the difference between checking and savings accounts to find out which is the best fit for you and how to use these types of accounts to ensure savvy money management.

The Basics: Checking vs. Savings

A checking account might be called a debit account, spending account, or transaction account, depending on your bank. Your checking account is designed for frequent transactions. It’s meant to hold your money short-term so you can spend it — for example, to pay bills, shop, write checks, or send money to friends.

You can also deposit and withdraw cash from your checking account. However, with the bulk of our financial lives going digital, you’re more likely to use a checking account like a digital wallet: It holds your cash reserves as you spend and you can pay people from it easily.

A savings account is a place to hold money you don’t intend to spend day to day. It has a separate account number from your checking account and doesn’t usually come with a debit card or checks for spending. Instead, you use the account to store money to reach financial goals, and you withdraw from the account in cash or into another account, such as your checking account, before you need to spend it.

Depending on the type of savings account your financial institution has set up, government regulations might limit the number of withdrawals you can make from a savings account per month. Bank accounts are regulated under the Federal Deposit Insurance Corporation (FDIC), which insures money in U.S.-chartered banks.

Key Features of Savings and Checking Accounts

The key differences between checking and savings accounts are the types of transactions they allow, interest rates you can earn, and withdrawal limits.

Debit and ATM Card Transactions

Debit cards let you pull money from the account without going to the bank or writing a check. They look like credit cards, and you can use them similarly to fund everyday transactions like buying groceries or gas, shopping, or paying for dinner.

You can also use a debit card to withdraw cash or check your account balance at an ATM. By contrast, an ATM card is similar and also lets you access your account at ATMs, but you can’t use it to pay for direct transactions as you can with a debit card.

Checking Account Debit Cards

Checking accounts typically come with debit cards to give you easy access to your money anytime from almost anywhere without going to a bank or ATM.

With competition increasing, especially with the growing popularity of online banks, many banks offer debit cards with rewards or cash-back programs similar to credit cards. You might get discounts with a network of retailers or earn a percentage of cash back for every debit card purchase.

Financial institutions earn money from retailer transaction fees when you swipe your debit card, so rewards are a way of giving you a portion of those earnings and encouraging you to continue using your card.

Savings Account ATM Cards

Savings accounts don’t come with debit cards, but you might get an ATM card that lets you withdraw cash and manage the account from an ATM. You won’t be able to use an ATM card for other types of transactions, like purchases at the register or online. Your bank may or may not count ATM withdrawals toward your monthly withdrawal limits.

A money market account is a type of savings account that comes with a debit card and checks. It earns interest like a savings account and imposes the same FDIC withdrawal limits, but you can get immediate, direct access to your money if you need it.

Interest Rates

Most banks offer some kind of interest-bearing account, which lets you earn money just for keeping your money in the account.

That’s because your money is an asset to a financial institution. It lets the bank conduct its business, like making loans. It earns money and passes some of the proceeds back to customers to reward you and encourage you to keep your money in its coffers.

Checking Account Interest Rates

Traditionally, basic checking accounts come with low or no interest, typically around 0.001%. This is still the case for most legacy banks and credit unions.

You might earn a higher interest rate — still probably as low as 0.01% — for keeping a minimum balance, conducting a number of transactions, or upgrading to an account with a monthly fee. Otherwise, checking accounts aren’t built to earn interest, because you’re not supposed to hold a lot of money in them.

Online and challenger banks like Varo are changing this standard, though. They eschew overhead costs like bank branches and personnel by partnering with existing banks, so they have more room to pay interest on checking accounts. Some have offered as much as 1% or 2% interest on checking accounts — although that amount fluctuates significantly with the Federal Reserve rate, the rate at which banks lend money to other banks.

Savings Account Interest Rates

Savings accounts are the traditional interest-bearing product in consumer banking. You’re supposed to keep larger amounts of money in them and not withdraw it often, so you stand to earn a bit of money on them each year.

Still, those earnings aren’t spectacular. The FDIC tracks average interest rates for savings accounts weekly, and it sat around 0.04% in March 2021. At a high point in interest rates in 2019, that average reached 0.10%. A high-yield savings account might pay 1%, 2%, or more, depending on current prevailing interest rates.

Savings accounts are good for short-term savings goals, like an emergency fund, a vacation, wedding, or home down payment.

Their relatively low yield makes them a poor option for long-term savings, though. For a higher yield — and, in many cases, tax advantages — put long-term savings into accounts designed for that purpose, like a retirement account, 529 college savings account, or a taxable brokerage account.

Fees

Like any consumer product, banks are competing for your business. With online banks disrupting the market with fee-free bank accounts, traditional institutions are scrambling to keep up, and fees are all over the place.

Look into fees when comparing bank accounts because this difference could save you a lot of money and prevent any surprises.

Checking Account Fees

Basic checking accounts traditionally come with a monthly maintenance fee, somewhere around $4 to $10 per month for a standard, no-interest, no-frills account. Most waive the fee if you meet monthly direct deposit, transaction, or balance requirements.

Legacy banks typically drop those fees for similar accounts for students and customers over age 65. Online banks tend to skip the monthly fee despite offering better features, like higher interest rates, ATM fee reimbursement, and budgeting apps.

Checking accounts may come with additional costs, depending on your activity, including:

  • Checks and Checkbooks. Some banks give you a few checks or a checkbook for free when you open an account, but that perk is increasingly rare as our need for paper checks dwindles. You’ll buy checks from your bank or a third party if you want to have checks on hand. Most banks let you schedule checks online that they’ll send in the mail if you have to pay bills by paper check.
  • ATM Fees. When you withdraw money at an ATM, you could pay a fee charged by the institution that owns the machine, plus a fee to your bank. Your bank usually lets you use its network ATMs for free. Some even reimburse you for fees charged by other banks.
  • Paper Statements. If you don’t want to do your banking online, you’ll probably pay to have the bank print and mail you a statement.
  • Debit Card Replacement. Your first debit card is free when you open an account, but you might pay to replace it if it’s lost or stolen.
  • Overdraft and NSF Fees. If your account includes overdraft protection, your bank will cover you if you take your account balance below $0. It’ll charge a hefty fee — usually around $35 — for the service.
  • Other Service Fees. Banks often charge fees for less common services, like a wire transfer, stop payment, or coin processing.

Banks include full fee tables online, so you can see exactly what you’d stand to pay before you open a checking account.

Savings Account Fees

Savings accounts tend to come with a monthly maintenance fee similar to checking accounts, between $4 and $10. They waive fees when you meet minimum balance and deposit requirements — which shouldn’t be tough to meet if you’re using your savings account as intended.

You also pay a fee per withdrawal for withdrawals beyond your monthly limit. The FDIC sets this limit at six withdrawals, but your bank can set it lower than that. The FDIC withdrawal limit for savings accounts has been suspended indefinitely in response to the COVID-19 pandemic, but banks aren’t required to lift their limits.

The Verdict: When Should You Use a Checking vs. Savings Account?

Checking and savings accounts have vastly different intended uses. Using them properly can help you save and earn money over time and achieve your financial goals.

You Should Use a Checking Account for…

  • Paycheck Deposits. Set up direct deposit to receive your paycheck or other income directly into your checking account, so you can immediately use it to cover expenses.
  • Day-to-Day Spending. Use your debit card when you’re shopping in person or online, buying groceries, hailing a cab, or doing anything else throughout your daily life that requires you to spend your money.
  • Paying Bills. Write checks or schedule online bill pay to draw money from your checking account to make payments on rent or mortgage, utilities, subscriptions, and debt.
  • Cash Withdrawals. When you need cash for daily spending, withdraw it from your checking account via ATM or at a bank branch.
  • Paying Friends. Send money to friends and family within your institution’s mobile banking app or by connecting your checking account to a peer-to-peer payment app like Zelle, Venmo, or PayPal.

You Should Use a Savings Account for…

  • Emergency Fund. Set aside funds to cover unexpected expenses or income loss in your savings account, where it can earn interest while it sits.
  • Holiday Savings. Save small amounts all year to pay for holiday gifts and events so you don’t have to foot the bill all at once. Some traditional banks offer Christmas or holiday savings “club” accounts that set your money aside but don’t earn as much interest as a regular savings account.
  • Short-Term Goals. Save for a down payment or other major upcoming expense in a savings account, where it’s harder to access and spend than cash in a checking account.
  • Paycheck Deposits. Build your nest egg by sending a portion of your direct deposit right into savings, or schedule an automatic transfer from your checking into savings for each payday.

How Checking and Savings Accounts Work Together

When you keep your checking and savings accounts at the same bank, you could access features like:

  • Overdraft Protection. Many banks let you connect your checking to a savings account to cover you in case you spend beyond your checking balance. Because you cover transactions with your own funds, the fee is usually much lower than typical overdraft fees.
  • Loyalty Perks. Banks reward customers who use lots of their financial products. You might get reduced fees or higher interest rates if you have both a savings and checking account with your bank. You might also get lower interest rates on a mortgage or other loans you take out with that bank.
  • Recurring Transfers. Automate your savings by setting up automatic transfers from your checking account into a savings account. You can do this between any accounts, even if they’re not at the same institution, but some banks make the process easy when they manage both accounts.

Pro tip: If you’re looking to set up a checking and savings account, one of our favorites is the CIT Bank Savings Connect. When you open both you will boost your earnings by receiving the highest possible APY from your savings.

Final Word

Typically you want to limit your checking account to monthly expenses and move the bulk of your money into the right kind of savings account, where you could earn a better return and avoid overspending.

A word of warning: A savings account shouldn’t be the catchall for all the money you don’t need for expenses. Many other types of accounts are designed for specific savings goals and come with advantages you don’t get with savings accounts. Look into:

Note that if you use a savings account with an online bank, it might not have all the features mentioned above. Banking apps facilitate saving differently, and many hold your savings in what’s technically a checking account based on FDIC definitions.

They might use a budgeting interface to separate your savings from your spending balance within a single account, or set up a second checking account to hold your savings at a different interest rate. Your money is still FDIC-insured and just as secure as with a traditional savings account; just make sure you can’t spend it too easily!

Source: moneycrashers.com

Posted on April 2, 2021

12 Best Money Market Accounts With the Highest Rates in 2021

You probably have a checking account with a local bank, national bank, or online bank – perhaps one of the many free checking accounts we’ve reviewed in the past. There’s a fair chance you have a traditional or online savings account. You might even have a certificate of deposit (CD), the cornerstone of any conservative savings strategy (and many an emergency fund).

But I’d guess you probably don’t have an active money market account (MMA) at a U.S.-based bank or credit union. And that’s a shame because money markets fill a crucial niche for folks seeking higher interest rates with short-term, checking-like flexibility.

Most money markets come with debit cards, paper checks, and even mobile bill pay. Even if a money market account doesn’t replace your checking account for day-to-day spending and expense management, it deserves a spot in your financial rotation.

Best Money Market Rates and Accounts at U.S. Banks

These are the best free MMA options available at U.S.-based online and traditional banks and credit unions right now. While none of these accounts have monthly maintenance fees, some may require linked checking accounts with such fees. In most cases, those fees can be waived with adequate minimum daily balances or recurring direct deposits.

Every account and financial institution listed here is protected by FDIC insurance, subject to a minimum $250,000 limit per account ownership category.

A note for would-be money market account holders: In 2020, the federal government relaxed Regulation D, a rule that previously prohibited financial institutions from allowing more than six savings or money market account withdrawals under normal circumstances. However, most banks continue to abide by the six-withdrawal-per-cycle guideline for both account types.

1. UFB Direct

0.20% APY on Balances of $25,000 or Greater

The UFB Direct money market account has one of the category’s best yields: 0.20% APY on balances of $25,000 or greater. It’s therefore ideal for applicants capable of bringing higher balances to the table.

Lower-asset depositors can still chase yield here. Balances below $25,000 earn 0.10% APY, though there’s a $10 monthly maintenance fee on accounts with balances under $5,000.

And UFB Direct’s digital banking tools make MMA management a breeze from your laptop, desktop, or smartphone.

  • Minimum Deposit and Balance Requirements: $5,000 to open. A $10 monthly maintenance fee applies to accounts with balances under $5,000.
  • Account Opening Bonus: None.
  • Yield: 0.20% APY on balances above $25,000.
  • Mobile Features: Full suite of mobile-ready digital banking features.
  • Possible Fees: $10 monthly maintenance fee on accounts with balances under $5,000. All fees and terms are subject to change.

See our UFB Direct review for more information.

Apply Now

2. CIT Bank

0.45% APY on All Balances; Free P2P Transfers

The CIT Bank Money Market account has a $100 minimum opening deposit requirement and yields 0.45% APY on all balances. That’s many times more than the national big-bank average for money market accounts.

Though you won’t get a checkbook with your account, the user-friendly peer-to-peer (P2P) transfer feature more than makes up for the inconvenience.

Don’t miss CIT Bank’s other high-yield savings products, including its traditional high-yield savings accounts and four different types of CDs. Competitive rates abound here.

  • Minimum Deposit and Account Balance Requirements: $100 to open and maintain.
  • Account Opening Bonus: None.
  • Yield: 0.45% APY on all balances.
  • Mobile Features: Free P2P transfers via People Pay.
  • Possible Fees: $25 overdraft fee, $10 excess withdrawal fee (limit five per month). All fees and terms are subject to change.

See our CIT Bank review for more information.

Apply Now

3. Nationwide Bank (Axos Bank)

0.50% APY on Balances Up to $100,000

Offered through Axos Bank, the Nationwide Bank Money Market Plus account has a $1,000 minimum opening deposit and requires a $1,000 minimum ongoing balance to avoid the monthly maintenance fee.

For your trouble, you’ll get a high APY that’s easily one of the best MMA yields in the category: 0.50% APY on all balances.

  • Minimum Deposit and Balance Requirements: $1,000 to open and avoid the monthly maintenance fee.
  • Account Opening Bonus: None.
  • Yield: 0.50% APY on all balances.
  • Mobile Features: Full suite of mobile-ready digital banking features.
  • Possible Fees: See Nationwide Bank’s legal disclosures for a complete accounting of possible fees.

Apply Now

4. Ally Bank

0.50% APY on All Balances; No Minimum Deposit or Balance Requirements

The Ally Bank Money Market Account imposes no minimum deposit or balance requirement and boasts an impressive yield (0.50% APY) on all balances, regardless of relationship status or total balances.

That’s multiple times higher than incumbent banks’ piddling money market yields. Plus, Ally Money Market customers enjoy seamless remote check deposit and access to some 43,000 fee-free ATMs in the U.S.

Ally is one of the relatively few online banks that makes it easy to open a new account in the name of a trust too.

  • Minimum Deposit and Balance Requirements: Ally does not have minimum initial deposit or ongoing account balance requirements.
  • Account Opening Bonus: None.
  • Yield: 0.50% APY on all balances.
  • Mobile Features: Full mobile functionality, including mobile check deposit, P2P transfers, and more.
  • Possible Fees: $10 excess withdrawal fee (over the six-per-month limit), $25 overdraft or nonsufficient funds (NSF) transaction fee, $7.50 returned item fee. Ally may change fees and terms at its discretion.

See our Ally Bank review for more information.

Apply Now

5. Sallie Mae Bank

0.40% APY on All Balances; No Minimum Deposit or Balance Requirements

The Sallie Mae Bank Money Market Account has no minimum deposit or ongoing balance requirements and yields 0.40% APY on all balances, many times the national average for big-bank money market accounts. All accounts boast check-writing privileges for $5 per check order.

If you’re looking for other deposit account types, Sallie Mae Bank has them in spades: the SmartyPig® goal-based savings account, a high-yield savings account, certificates of deposit ranging from 6 to 60 months, and personal loans.

  • Minimum Deposit and Balance Requirements: There’s no minimum initial deposit or ongoing account balance requirement here.
  • Account Opening Bonus: None.
  • Yield: 0.40% APY on all balances.
  • Mobile Features: Full mobile functionality, including funds transfers.
  • Possible Fees: $5 per check order, $10 excess withdrawal fee (over the six-per-month limit, limit seven per month), $19 NSF transaction fee. All fees and terms are subject to change.

Apply Now

6. MemoryBank

0.15% APY on All Balances; Very Low Minimum Deposit Requirements

The MemoryBank Online Money Market Account is routinely among the highest-yielding money market accounts on the market today. But high yield isn’t the only reason for MemoryBank’s popularity.

A small minimum balance to open, fee-free access to nearly 100,000 ATMs in four major networks, and the same high yield on all balances up to $1 million don’t hurt. Robust mobile features seal the deal.

  • Minimum Deposit and Balance Requirements: $50 to open and no ongoing balance requirements.
  • Account Opening Bonus: None.
  • Yield: 0.15% APY on all balances up to $1 million.
  • Mobile Features: MemoryBank’s mobile app has a full suite of features, including mobile check deposit, bill pay, and funds transfers. It’s compatible with Samsung Pay and Apple Pay, two leading mobile contactless payment solutions.
  • Possible Fees: $36 overdraft fee per item, $3 paper statement fee, $12 returned item fee.

Apply Now

7. TIAA Bank

0.40% APY on All Balances During the First Year; Up to 0.40% APY After the First Year

With nearly the highest rate on this list, the TIAA Bank Money Market Account is appropriate for depositors with at least $500 on hand to open the account.TIAA Bank’s Yield Pledge covers this account, so it’s guaranteed to yield in the top 5% of all “competitive” money market accounts tracked by the Bankrate National Average survey.

All accounts qualify for up to $15 in ATM fee reimbursements per month, which should be enough if you stay below the six-transaction-per-month threshold. If you’re looking for other high-yield accounts in the TIAA family, don’t miss the high-yield savings option.

  • Minimum Deposit and Balance Requirements: $500 to open. There’s no ongoing balance requirement, though you need to keep at least a $5,000 minimum daily balance in the account to qualify for TIAA Bank’s unlimited ATM fee waivers.
  • Account Opening Bonus: 0.40% APY on all balances during the first year (12 billing cycles).
  • Yield: Following the conclusion of the first-year promotional period, yields range as high as 0.40% APY, depending on tier. All yields and tiers are subject to change.
  • Mobile Features: Full mobile functionality, including mobile check deposits.
  • Possible Fees: $10 excess withdrawal fee (TIAA reserves the right to close or convert accounts on which excess withdrawals regularly occur); $10 cashier’s check fee. Fees and terms are subject to change.

See our TIAA Bank review for more information.

Apply Now

8. Discover Bank

Up to 0.35% APY; 60,000 Fee-Free ATMs

The Discover Bank Money Market Account is another great option for depositors with extra cash on hand. Although there’s a steep $2,500 minimum deposit and an ongoing balance requirement, there’s no minimum balance fee. So you won’t need to worry about losing all your accrued interest (and then some) if you need to make an early withdrawal.

On the bright side, this account yields at least 0.30% APY on balances above $2,500 and boasts a slew of user-friendly features. Plus, Discover Bank has a full lineup of other account types, including checking, savings, and CDs.

  • Minimum Deposit and Balance Requirements: $2,500 to open and maintain the account.
  • Account Opening Bonus: None.
  • Yield: 0.30% APY on balances of $100,000 or less; 0.35% APY on balances above $100,000.
  • Mobile Features: Full mobile functionality, including free mobile check deposit and digital bill pay.
  • Possible Fees: $15 excess withdrawal fee, $30 NSF transaction fee. All fees are subject to change.

See our Discover Bank review for more information.

Apply Now

9. BBVA

Competitive Money Market Rates

For customers outside BBVA’s southwestern U.S. trade area, the BBVA Money Market Account offers a competitive yield on all balances.

However, there’s a $15 monthly service fee when you fail to maintain a balance of $10,000 or higher or a minimum $25 monthly recurring checking transfer. That means this account isn’t ideal for lower-asset depositors.

  • Minimum Deposit and Balance Requirements: $25 to open and maintain an account.
  • Account Opening Bonus: Enjoy a three-month promotional balance that’s significantly higher than the ongoing rate.
  • Mobile Features: Full mobile functionality, plus value-added apps and features.
  • Possible Fees: $5 paper statement fee; $15 monthly service fee without a $25 monthly recurring checking transfer or $10,000 minimum collected daily balance.

Apply Now

10. Synchrony Bank

0.35% APY on All Balances; ATM Fee Reimbursements Every Statement Cycle (Max $5 Per Cycle)

The Synchrony Bank Money Market account has no minimum deposit or ongoing balance requirements. Its 0.35% APY applies to all balances, making this account perfect for savers just starting out on the road to financial independence.

Checks are available upon request at no charge. If you’re in the market for other savings products, check out Synchrony’s CDs, high-yield savings account, and IRA options.

  • Minimum Deposit and Balance Requirements: None.
  • Account Opening Bonus: None.
  • Yield: 0.35% APY on all balances.
  • Mobile Features: Full mobile functionality, including mobile deposit and transfers.
  • Possible Fees: No excess withdrawal fee, but Synchrony reserves the right to close or transfer accounts with repeated excess withdrawals. Overall, Synchrony has virtually no fees.

Apply Now

11. Zions Bank

Competitive Yields on Balances Above $1,000

The Zions Bank Online Money Market account has a low minimum opening deposit requirement and earns a good rate of return on balances above $1,000.

It’s therefore ideal for most savers seeking to blend the predictability of high savings returns with the flexibility of ATM access – though it can’t go toe to toe with the cream of the high-yield savings account crop.

As a full-service bank, Zions Bank has multiple personal checking, savings, and CD options (and some of the best CD rates around to boot). Many are available nationwide via Zions Bank’s robust online banking arm, but be aware that product availability and interest rates may vary by state.

  • Minimum Deposit and Balance Requirements: $500 minimum opening deposit; $1,000 minimum balance to earn interest.
  • Account Opening Bonus: None.
  • Yield: Rates may vary by state. See Zions Bank’s website for the latest offers.
  • Mobile Features: Full-service mobile apps and full-service mobile web browser functionality, including mobile deposit and transfers.
  • Possible Fees: There’s no monthly maintenance fee. Zions Bank reserves the right to charge for excess withdrawals over the 6-per-month limit and levies a $5 fee on dormant accounts after 1 year of inactivity.

Apply Now

12. Huntington Bank

First-Year Yields Up to 0.08% APY

The Huntington Bank Relationship Money Market Account has a solid promotional rate schedule and decent rates thereafter on balances from $25,000 up to $99,999,999.99, making it an ideal vehicle for high-net-worth savers.

The best yields are reserved for Huntington Bank Private Client status holders, but Huntington 5 Checking and Huntington 25 Checking accountholders do quite well here as well. As a full-service bank, Huntington Bank boasts attractive savings and CD options too.

  • Minimum Deposit and Balance Requirements: None, but the minimum balance to avoid the monthly maintenance fee is $25,000.
  • Account Opening Bonus: There’s currently no account opening bonus. Check back for the latest offers.
  • Yield: For new accounts opened, interest rates during the first 90 days range up to 0.08% for Private Client accountholders on balances between $1 million and $2,000,000.99. After the first 90 days, earn up to 0.08% APY (first year) for Private Client accountholders on balances between $25,000 and $2,000,000.99.
  • Mobile Features: Full mobile functionality, with mobile deposits, transfers, and other features.
  • Possible Fees: The $25 monthly maintenance fee is waived when you maintain an average daily balance of $25,000 or also have an active Huntington 5 or Huntington 25 Checking account.

Apply Now

Final Word

These money market accounts are among the most generous of their kind at U.S. banks and credit unions, but they’re not always the best savings options out there for yield-chasing depositors.

If you’re satisfied with your current banking relationship, head into a branch or call up the customer service hotline and ask about money market options. You might be surprised by what you learn.

Alternatively, check out our roundup of the best bank account promotions for new account holders. Many of the institutions listed there offer high-yield money market accounts with no ongoing fees and reasonable minimums. Even if you come around to one of the choices on this list, it’s nice to have options.

Source: moneycrashers.com

Posted on March 30, 2021

How to Spend Your Stimulus Check: 4 Smart Options

A third round of stimulus checks is making its way to millions of Americans’ bank accounts, and this time it’s a nice chunk of change.

Individuals making up to $75,000 per year (or $150,000 per year for couples) will receive $1,400 — plus $1,400 for each dependent regardless of age. The payments phase out completely for individuals making $80,000 or more, and couples who earn over $160,000.

That means a middle-income family of four will see a $5,600 windfall.

Get all your questions answered about the third round of stimulus checks here.

Before you see that boost to your bank account though, get prepared by planning how you can put the money to best use. Of course, everyone’s financial situation is different, but here are four key things to consider when deciding how to spend your stimulus check.

4 Considerations for How to Spend Your Stimulus Check

1. Cover Your Needs First

If you’re having trouble paying bills or putting food on the table, you should use your stimulus money to cover those basic needs.

Create a bare-bones budget and total up the cost of your absolute essential expenses. Use your stimulus check to supplement where you’re coming up short for the next couple of months. If you’re a couple hundred dollars short every month, with careful budgeting that $1,400 check could provide a needed cushion stretching several months out.

However, don’t wait until you’re in dire financial straits to seek assistance with your basic needs. Contact the United Way’s 211 network, the Salvation Army or your local food bank if you can’t afford groceries or housing.

Your stimulus check could also be well spent on necessary expenses like car repairs or dental work that you’ve been putting off due to lack of funds.

2. Increase Your Savings

If you’ve got stable employment and are bringing in enough money to cover your essential needs, look to using your stimulus check to bolster your emergency fund.

While the typical advice is to have at least three months worth of living expenses in an emergency fund, you might want to bump that to at least six months given the ongoing economic uncertainty created by the pandemic.

Separate your emergency savings from your spending money so you won’t be tempted to dip into your savings. A high-yield savings account will earn interest while your money’s sitting in the bank.

3. Think About Your Future

If your needs are being covered and you have a robust emergency fund, consider spending the money you’ll get from the stimulus bill to set yourself up for a better financial future.

If you haven’t started saving for retirement, your $1,400 put in a Roth IRA today will grow to a nice balance a few decades from now, thanks to the power of compound interest. Of course, you should try to keep adding money every year.

Taking a certification course could position you for a promotion or new job. Alternatively, you could use the money as seed capital to pursue an entrepreneurial path.

Making a dent in your debt or paying a large bill upfront rather than over time could help you save money in the long run.

4. Help Others

If you’re in a financially stable situation with a healthy emergency fund, another good use of your stimulus money could be to help others.

Use the extra cash to help a family member or friend in need or donate to a reputable charity. Or you could spend your money at local businesses and restaurants — or purchase gift cards for future visits.

You don’t have to have a financial surplus, however, to find ways to help others. Donating blood, going grocery shopping for an elderly neighbor or troubleshooting teleworking tech for a friend are all ways you can be of service without spending money.

Nicole Dow is a senior writer at The Penny Hoarder.

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Posted on March 25, 2021

How to Use Your Stimulus Check: 10 Tips to Spend It Wisely

In response to COVID-19, the federal government passed a $2.2 trillion stimulus bill with the goal of aiding Americans and providing relief in a time of great financial hardship. This bill — also known as the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) — was signed in late March and has supplemented millions of eligible citizens that have been hit hard by the coronavirus with one-time checks.

Using 2018 and 2019 tax return information, the IRS has given eligible individuals $1,200, married couples $2,400, and an additional $500 per child. More than 23.1 million Americans have filed for unemployment since the middle of March 2020, so this stimulus check has provided much support to those who are struggling to stay afloat. If you have not yet received your payment, see if you qualify for the stimulus check.

Managing your finances and maximizing the funds of your stimulus check are key during these unpredictable times. Read more to learn 10 ways to use your stimulus check wisely.

1. Create a Budget

Once you receive your stimulus check, reevaluate your budget. Since we are facing uncertain times and the future is unclear, creating a new budget for yourself will give you the flexibility to stretch your stimulus check for a longer period of time. Having a budget is the best way to take control of where you’re spending your money and ensure you’re making the most of what you have. For example, a budget may make it clear where you need to trim additional expenses, such as unnecessary services or subscriptions.

2. Address Essential Needs

Taking care of your basic needs is an important thing to keep in mind when thinking of how to use your stimulus check. Put this money towards essentials such as food, rent, and other bills. Be sure to find out if you are eligible for financial relief — many lenders, such as financial institutions, auto services, and utility companies, are offering some allowances during this difficult time.

3. Add to an Emergency Fund

You never know what may happen in the future. Consider putting your stimulus check towards an emergency fund if you can afford to do so. Having a financial backup fund provides peace of mind and can be used on a rainy day. Usually, these funds should hold enough money to cover expenses for three to six months, but something is always better than nothing.

Using your stimulus check this way can offer a great kick start to this type of account. Another plus is that you can earn interest over time on your emergency fund if you put it in a high yield savings account.

Pay Down Debt

4. Pay Down Debt

If you have the means to, use your stimulus check to pay down high-interest debt. For example, this type of debt includes any high-interest loan or credit card debt. As of February 2020, the average annual percentage rate for a credit card stood at 15.09 percent, according to the Federal Reserve, which is a good reason to focus on tackling this debt first.

Come up with a repayment strategy and contact your credit card lender to discuss other payment options or schedules if necessary.

5. Help Your Local Community

During this time, many local businesses are struggling to make ends meet as they have been forced to shut down or minimize hours due to the pandemic. You can use your stimulus check to give these businesses or their employees some much-needed financial help since many people are now out of a job.

Ways to do this include purchasing a gift card from your favorite places such as restaurants or other small shops to use once restrictions are lifted. Food delivery is another option — consider leaving the delivery worker or employee a big tip. Many GoFundMe’s have also been created that you can contribute to.

6. Pay Your Taxes

Due to COVID-19, the deadline for filing taxes has been postponed to July 15, 2020. If you still haven’t filed or paid your income taxes, you can use the stimulus check to help out with your outstanding tax payments.

Paying your taxes on time is important even if you can’t pay the full amount that’s due. A good rule to follow is that if you must pay late, then the sooner your taxes are paid, the less is owed in interest and penalties. There are a few payment options, such as Electronic Funds Withdrawal (the quickest and easiest way), same-day wire, check or money order, or even cash.

7. Open a High-Yield Savings Account

If your bills and essential needs have been met, you may want to increase your savings, and put your stimulus check into a high-yield savings account. High-yield savings accounts are comparable to traditional savings accounts, with one difference: they offer a much higher annual percentage yield.

While we’re currently in a low-interest environment, these high-yield accounts typically pay up to 25 times the national average of a traditional savings account and are low in risk.

8. Contribute to a 529 or College Savings Account

Use the stimulus check money to open or contribute more to a long-term investment account for your kids, like a 529 plan. This type of account allows you to withdraw growth on your investment tax-free. Depending on your state, there may also be additional tax benefits.

With the money you have saved in this account you can use it, tax-free, to pay for qualified expenses such as books, supplies, and tuition. The stimulus check package also provides $500 per child so if you do not need that money, you could think about investing the money into a 529 account and help save for their future.

Contribute to a 529 or College Savings Account

9. Invest in Yourself

With all of the newfound time on your hands, investing in yourself and continuing your education is another great option for how you can use your stimulus check. Set yourself up for success and think about the areas you are interested in or ways you want to improve your skills.

You can put this money and time towards learning a new skill, such as one that is necessary for your career or even a language you’ve been curious about learning. If you’re still in college, consider putting this money towards your tuition for next semester or use it to pay down your student loans.

10. Donate to Those in Need

If you find yourself not needing the extra cash from the stimulus check, you could make charitable donations to those in need or to a cause you believe in, or to friends and family who need extra help.

Many relief platforms are fighting for the cause, such as charities, food banks, nonprofits, and hospitals. These include trusted sources such as the World Health Organization and the American Red Cross. Check with your local and state governments for more opportunities to help those in need.

Invest in Yourself

There are many possible ways you can use your stimulus check, as the choice ultimately depends on your personal preference and financial situation. However, following smart financial decisions such as budgeting, taking care of personal needs, and paying down debt should be priorities to make the most of your stimulus check. Following these 10 tips can help you get on the right track and allow you to figure out how to use your stimulus check wisely.

Sources: IRS

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Source: mint.intuit.com

Posted on March 22, 2021

How Income Tax Withholding Works

If you’ve ever looked at your paycheck and wondered where all your hard-earned money went, you’re not alone. Maybe you’ve even seen a line (with a large number next to it) and wondered, What is withholding tax? And why do they take so much?

Federal and state withholding taxes aren’t a punishment for your hard work.

The tax has a purpose, and in the long run, you’ll probably be glad it was taken from your check rather than on Tax Day.

What is Income Tax Withholding?

You know that you usually must file a tax return by mid-April, but what you might not be aware of is that you actually pay your taxes throughout the year. That’s the state and/or federal withholding you see on your paycheck.

A withholding tax is an amount, based on your salary, that your employer sets aside and then pays directly to the government on your behalf. It’s a credit against the full amount of personal income tax you will owe for the year.

You are able to designate what portion of your check goes toward your taxes on the IRS W-4 form (more on that in a bit). If you allocate too much, you will receive a tax refund when you file your taxes. If you set aside too little, you will owe a balance at that time.

Your federal withholding tax rate depends on your income and tax bracket.

What About State Taxes?

If you live in a state that charges state income tax, you will also see tax withholding for that on your paycheck. There are just nine states that don’t tax earned income:

•  Alaska
•  Florida
•  Nevada
•  New Hampshire
•  South Dakota
•  Tennessee
•  Texas
•  Washington
•  Wyoming

The concept of tax withholding works the same at the state level as the federal: A certain portion is put toward your future state tax bill, and you may either owe or get a refund, depending on how much you paid in.

What’s the Purpose of Federal Withholding?

Imagine getting a tax bill in April for $10,000! Most people couldn’t afford to pay that large sum all at once, so the IRS spread out the federal income tax withheld across paychecks throughout the year.

You don’t see the taxes you pay as such a large sum when bits are taken throughout the year, and you likely don’t miss that money the way you would if you paid all at once.

And the government probably prefers to receive revenue from federal withholding throughout the year rather than all at once. This money is put toward health care programs, education, infrastructure, and other things that keep the country moving forward.

Tax and Employment Documents to Know

When you are first hired at a company, you fill out a W-4 form that includes your salary and tax withholding. Whether you are single or married, and whether you have dependents or other withholding allowances, will determine how much of each paycheck is diverted toward your federal tax bill. You may also opt to have additional funds withheld from each paycheck.

Then when tax time rolls around, you will receive IRS Form W-2. This includes information on how much income you earned in a given tax year, as well as how much you paid in federal, state, and other taxes.

You’ll use this W-2 to file your taxes, and it will determine whether you receive a tax refund, owe more taxes, or break even.

Finding the Right Balance of Federal Tax Withholding

It can take a bit of tweaking to find that balance between overpaying in federal withholding and having to pay more when you file your taxes.

Some people like getting a tax refund because it’s a lump sum they can put toward debt or invest. But realize that overpaying is a bit like giving the government a free loan throughout the year!

If you better balanced what is taken out of your paychecks, you could take the excess you would have paid and invest it.

The IRS has a Tax Withholding Estimator you can use based on your current situation.

While you aren’t asked to fill out a new W-4 each year, you may request one if you think you need to adjust the withholding amount.

Sometimes it might be wise to adjust how much income tax is withheld include:

•  Starting a new job or position
•  Having a child
•  Getting married or divorced
•  Buying a house

Attempting to Reduce Your Taxable Income

While there’s no magic wand for paying less in taxes, there are a few strategies that may reduce your taxable income, which could in turn lower federal withholding (as long as you update your W-4).

Investing in Your Retirement

Saving for your future has two big benefits: First, you build a nest egg intended to protect you when you retire. And second, it may help you pay less in taxes now.

Certain retirement accounts, including some individual retirement accounts and 401(k) plans, can reduce taxable income. Say you make $50,000 in salary a year. You put $5,000 into your qualifying retirement account. You will only be taxed on $45,000 because your retirement investment reduces your taxable income.

Investing in Your Health

By contributing to a qualifying health savings account or flexible spending account, you can set aside money for health-related expenses and lower your taxable income.

Contributions to an HSA or FSA (up to the limits set by the IRS) will be deducted from your income when taxes are calculated, likely resulting in your paying less in taxes.

Whether you choose one of these strategies or both, know what you’re getting into. Both retirement accounts and HSAs have limits for how much you can contribute in a year. That amount is higher for couples or families.

The Takeaway

No one likes the idea of taxes, but the fact is that money is put toward things we all enjoy, like smooth roads and education programs. And federal withholding from your paycheck keeps you from having a giant bill when you file taxes.

The important thing is to understand how much is being withheld and knowing whether you need to modify your W-4 to find a better balance between overpaying and owing more money in taxes.

Another way to be smart with your money? Open a SoFi Money® digital cash management account to earn interest and cash-back rewards. Organize your money, set savings goals, and more with a fee-free account.

For a limited time, get a bonus when you start a direct deposit.

Save, spend, and savor the rewards of SoFi Money today.

SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC . Neither SoFi nor its affiliates is a bank.
SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
As of 6/9/2020, accounts with recurring monthly deposits of $500 or more each month, will earn interest at 0.25%. All other accounts will earn interest at 0.01%. Interest rates are variable and subject to change at our discretion at any time. Accounts opened prior to June 8, 2020, will continue to earn interest at 0.25% irrespective of deposit activity. SoFi’s Securities reserves the right to change this
policy at our discretion at any time. Accounts which are eligible to earn interest at 0.25% (including accounts opened
prior to June 8, 2020) will also be eligible to participate in the SoFi Money Cashback Rewards Program.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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.
SOCO21007

Source: sofi.com

Posted on March 18, 2021

Advantages of Saving With a Money Market Account

Do you have money that you don’t want to risk in the stock market, but also needs protection from inflation eating away at its value? Maybe you’ve saved up an emergency fund and want to earn some sort of return on your money, but you don’t want to lose access to the funds as you would if you put it in a Certificate of Deposit (CDs). If so, a Discover Money Market Account could be a good choice for your situation. Discover Money Market Accounts offer competitive rates, debit and ATM access, easy online transfers and bill pay.1

Money Market fees can vary greatly from bank to bank. With a Discover Money Market Account, you won’t be charged an account fee.2 That includes no minimum balance fee, or fees for insufficient funds or using online bill pay.

Aside from fees you also need to keep an eye on short term interest rates. Money market rates may be impacted by market swings. As the Federal Reserve makes changes with monetary and fiscal policy the interest rate on your money market account can change as well.

If you're looking for a safe haven for your money, a money market account could suit your needs

Looking for a safe haven

Does a Money Market Account meet your needs? Money Market Accounts share traits with Certificates of Deposit, checking accounts, and saving accounts. Here’s how:

  • Certificates of Deposit (CD): with a CD you’re getting a better interest rate than you would with most checking and saving accounts, but you give up liquidity because you can’t access the funds without paying a penalty; Money Market Accounts generate better interest than most checking accounts (and very short term CDs).
  • Checking accounts: with a checking account you get to write checks and use an ATM or debit card to withdraw funds without penalty; most Money Market Accounts allow you check writing privileges.1
  • Saving accounts: with an Online Savings account you earn interest in exchange for parking your cash with the bank and you cannot have more than 6 of certain types of withdrawals and transfers per month; with a Money Market Account you also have a limit of 6 of certain types of withdrawals and transfers per calendar month, however, you can access cash at ATMs.1

With higher-than-average rates, a money market account can help grow your savings without the risk of the stock market

As you can see, a Discover Money Market Account offers a mix of benefits: above-average interest rates, liquidity when you need it, and the ability to withdraw funds via check, debit card or online.1

With Discover’s Money Market Account, you can access your funds by check, debit card, online or ATM (subject to certain monthly transaction caps).1 You can even arrange for no-fee online ACH transfers and bill payments from your account. On top of that, deposits at Discover are FDIC insured up to the maximum allowed by law.

Even if you’re already using a Discover Online Savings Account or Discover CDs to address some of your financial priorities, consider fine-tuning your savings strategies with a Discover Money Market Account too. It may help bring more of your goals within reach and on schedule.

In addition to a savings and checking account, a money market account can help you reach your financial goals

Discover

Regardless of your savings goal you can always find the right savings account for your needs at Discover. Open an account online in minutes or call our 24-hour U.S.-based Customer Service at 1-800-347-7000.

The article and information provided herein are for informational purposes only and are not intended as a substitute for professional advice.

1 Federal law limits certain types of withdrawals and transfers from savings and money market accounts to a combined total of 6 per calendar month per account. There are no limits on ATM withdrawals or official checks mailed to you. To get an account with an unlimited number of transactions, consider opening a Discover Cashback Debit account. If you go over these limitations on more than an occasional basis, your account may be closed. See Section 11 of the Deposit Account Agreement for more details.

2 Outgoing wire transfers are subject to a service charge. You may be charged a fee by a non-Discover ATM if it is not part of the 60,000+ ATMs in our no-fee network.

Source: discover.com

Posted on March 14, 2021

How to Manage Passive Income Streams

With the cost of living rising, one source of income often isn’t enough to support a comfortable lifestyle anymore. Estimates suggest that nearly 59 million Americans, 36% of Americans , work in some sort of freelance capacity.

Side hustles can be a great way to increase your monthly earnings, but they generally require quite a bit of time and effort.

Passive income is money that you earn without active involvement. In other words, it is income that isn’t attached to an hourly wage or annual salary. Passive income streams could include things like cash flow from rental properties, dividend-yielding stocks, sales of a product (that requires little or no effort), royalties, and more.

If you own a business, such as an LLC, you could be earning money in your sleep through online sales, rising stock value, or other sources. Jeff Bezos, for example, earns around $152,207 every minute .

Types of Income

In addition to passive income, there are other types of income you can earn.

Earned Income: This is the most common type of income—money you make from a job. With earned income you are trading your time for money.
Profit Income: Profit income comes from the sale of a product after expenses have been deducted.
Interest Income: This can be money earned from one entity lending to another entity, such as a person, company, or bank. This can also be referred to as interest from accounts such as savings accounts and CD’s (Certificate of Deposits) in which you receive a 1099-INT at the end of the year.
Dividend Income: Most dividend income is earned by the distribution of income from companies to shareholders owning stocks that pay dividends.
Rental Income: Rental income is earned when you rent or lease a house, car, or other property you own to someone else.
Capital Gains: This generally refers to profit (or gain) that is subject to taxation when you sell an asset such as stock or real estate. There are both long- and short-term capital-gain tax rates depending upon how long you held the asset before sale.
Royalty Income: Royalty income is generated when you own the rights to a piece of art, music, literature, or another asset, or from the extraction of oil, gas, or minerals, and it is licensed for other people to use.

The Benefits of Earning Passive Income

There are only 24 hours in a day. If you go to a job each day that pays you a set amount of money, that is the maximum amount that you’ll ever make in a 24-hour period. That is called earned income.

By investing some of that earned income and creating sources of passive income, you may be able to increase your earnings. Diversifying your income stream may also improve your financial security. Some benefits of passive income are:

More Free Time: By earning money through passive income sources, you might be able to free time in your schedule. You may choose to spend more time with your family, pursue a creative project or new business idea, or travel the world.
Financial Security: Even if you still plan to keep your 9-to-5 job, having multiple sources of income could help increase your financial security. If you lose your job, get sick, or injured, you may still have money coming in to cover expenses. This is especially important if you are supporting a family.
Tax Benefits: Depending on how you earn your passive income, you may qualify for more tax breaks than if you only earn through a 9-to-5 job. If you start your own business, you may be able to write off certain expenses such as equipment, business travel, and software subscriptions. (Consult with your tax advisor on how to set up this business, LLC, etc.)
Location Flexibility: If you don’t have to go into an office each day, you’ll be free to move around and, possibly, live anywhere in the world. Many passive income streams can be managed from your phone or laptop.
Achieve Financial Independence: The definition of financial independence is having enough income to cover your expenses without having to actively work in order to cover living expenses. This could allow you to retire early and have more freedom to live your life the way you choose. Whether you’re interested in retiring early or not, passive income can be one way to help you reach financial independence.
Pay Off Debt: Passive income may help you to supplement your income so that you will have the opportunity to pay off any debts more quickly.

Potential Downsides of Passive Income

Although it might sound like a dream come true to quit your job and travel the world, earning through passive income is not quite that simple.

Earning Passive Income Is Not a Passive Activity

Whether you earn passive income through a rental property, running a blog, or in another way, you will still need to put in some time and effort. It takes time to get these income sources up and running, and they don’t always work out as planned.

If, for example, you run an Airbnb, maintain the property, ensure a high-quality experience for guests, and address any issues or concerns guests may have to secure positive reviews.

Passive Income Requires Diversity

In order to earn enough passive income to quit your job and cover all your expenses, you would most likely need more than one source of income. It’s also wise not to put all your eggs in one basket.

Although you may no longer need to clock into a 9-to-5 job, you will likely still need to spend time managing multiple income streams.

It’s Lonely At the Top

It might sound great to never have to go to the office again and to have the freedom to travel, but earning money through passive income can become lonely.

Not having anyone to talk to during the day might make you stir crazy, and if you aren’t self-motivated, you may find it difficult to stay on task if you need to manage your passive income streams.

Getting Started May Require Investment

Depending on how you plan to earn passive income, it may require an initial financial investment. You may need money for a down payment on a rental property, the development of a product you plan to sell, or for investment into dividend-yielding stocks.

Types of Passive Income

There are a number of ways to earn passive income. Here are a few options:

Investing Your Money

Opening a High Yield Savings Account: By simply putting your money in the bank, you may be able to start to earn passive income on it. If you invest in an FDIC insured account, the first $250,000 of your money is protected. There are both banks and online platforms which offer high yield savings accounts.

Buying a Company: Although this may take an up-front investment, buying into a business and becoming a silent partner can be another way to earn passive income. A business such as a car wash or laundromat has the potential to earn quite a bit of money each month.

Peer-to-Peer (P2P) Lending: Using a peer-to-peer or crowd-lending website, you can get matched to lend your money to individuals as an installment-type loan and earn interest on it. You might earn even more than from a bank, depending on the loan.

Buying a Rental Property or Investing in Crowdfunded Real Estate: Another popular source of passive income is rental properties. You might want to purchase a home to rent out to an ongoing tenant, or list a property on a short-term rental site like Airbnb. There are also platforms where you can invest a smaller amount of money into a crowdfunded real estate project.

Investing in Index Funds or Dividend-Paying Stocks: There is no guarantee that investing in dividend-paying stocks will continue to earn you passive income, but some investors may enjoy the thrill of the ups and downs of the stock market. Dividend-paying stocks typically pay investors quarterly or annually and often allow investors to reinvest the dividends.

Investing with an Automated Advisor: If you’re just getting started with investing, you may want to use automated investing tools to help you choose the appropriate allocation of assets for your goals. Tools such as SoFi’s Automated Investing allow you to automatically invest each month and grow your portfolio over time.

If You Want to Invest Time

Creating an Online Course: If you have a special skill or knowledge about a certain topic, you may be able to create a video course where you teach people about it and charge them to take the course.

Selling Digital Products: You may want to research online platforms where you can sell everything from computer backgrounds to e-books. Whether you’re an artist, graphic designer, or writer, you can create digital products to sell online.

Licensing Your Photos: Many companies, bloggers, and individuals use stock photos on a regular basis. You may be able to upload your best photos to stock photo sites and earn passive income on them.

Creating a Mobile App: If you’ve been dreaming about an amazing phone app that you think a lot of other people would use, you may want to look into hiring a development team to create it.

Selling a Product: You may be able to earn passive income through sales of a product that you create. This could be a book that you write or a physical product that you design and make. You might also list items you already own on sites like eBay and earn extra income through those sales.

Starting a Blog: If you like to write and are passionate about a certain topic, you might want to start a blog and earn money through ads and affiliate links.

Managing Passive Income Streams

No matter which type of passive income you choose to pursue, it’s important to keep track of your finances and both your short-term and long-term financial goals.

Tracking multiple sources of income in a monthly budget can be a complex task. Pay attention to how much money you put into the maintenance of your passive income stream(s), such as property upkeep or monthly online services.

SoFi Relay is one option to simplify how you manage your income streams because it allows you to see all of your financial information in one place. In the app, you can keep track of your monthly income and create goals for your passive income, such as a home, vacation, or retirement, and automate your finances.

The Takeaway

Establishing passive income streams is one way to diversify your income and can help you build wealth in the long term. There are a variety of ways to earn passive income, such as through investing, rental properties, and earning royalties. Some passive income sources require a financial commitment upfront, such as purchasing a rental property, and others may require a time commitment.

If you’re looking to build an emergency fund with your passive income, SoFi Money® may help you to achieve your goals. SoFi Money® is a cash management account that doesn’t charge any account fees.

Ready to take action on saving? Learn more about how SoFi Money® can help you meet your goals.


SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC . Neither SoFi nor its affiliates is a bank.
SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
SoFi’s Relay tool offers users the ability to connect both in-house 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. 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 provided to you is a Vantage Score® based on TransUnion™ (the “Processing Agent”) data.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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Source: sofi.com

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