As interest rates start to soften, you may hear more buzz about student loan refinancing as a way to lower your bills.
“Essentially, what it means is you are taking the debt that you owe and you are giving it to another company. They’re going to pay off the debt that you have with the company you currently work with, and then you’re going to pay this new company,” explains Kristen Ahlenius, director of education and advice at Your Money Line, a workplace financial wellness company.
For private loan borrowers who can qualify for a better interest rate, refinancing can shrink your student loan payments with little or no downside. But student loan refinancing comes with a steep opportunity cost if you have federal student loans — even if you can get a lower rate. You’ll transfer your debt from the Education Department to a private lender, and you’ll permanently forfeit federal borrower protections.
If you’re considering student loan refinancing, here’s what to know based on your loan type — plus alternate ways to lower your payments and get student debt relief.
Private student loan borrowers: Consider refinancing if you can save on your interest rate
A borrower with only private student loans is a good refi candidate, as long as they meet credit-worthiness guidelines, says Stanley Tate, a lawyer focused on student loans. Typically, you must have a stable source of income and a credit score at least in the high 600s to qualify for the lowest advertised rates.
Consider refinancing now if you can save at least half a percentage point on your current interest rate, Tate says. Keep an eye on rates even after you refinance — you can refinance multiple times if rates keep falling.
“You should be aggressive in monitoring your rates until you get to a really good rate,” Tate says. “We may not see 2% or 3% anytime soon, but 7.5% versus 8% is way better. It seems small, but over a 20-year loan, that adds up.”
Before deciding to refinance, research lenders and loan terms. A student loan refinancing calculator can help you compare options. Pay attention to all aspects of the loans you’re considering — not just the interest rate.
“Rate is what most people think of, but a lot of times, people don’t think, ‘What happens if I lose my job? Do I need a co-signer? What are the terms of this loan? When can it be in default? What are the collection terms? What are cases where the interest rate may go up or down in the future for this loan?’” says Jantz Hoffman, executive director of the Certified Student Loan Advisors Board of Standards, a nonprofit that trains financial planners to help their clients make student loan decisions. “And because they’re not uniform, those contracts and the language in those contracts matter.”
And if you’re having a positive experience with your current private student loan lender — no issues with autopay, the online portal or customer service — refinancing with a new lender might not be worth it.
“Just consider that sometimes that’s not always the experience,” Ahlenius says. “Unless there’s a significant cost savings, remember that that experience is also worth something.”
Federal student loan borrowers: Think twice before refinancing and forfeiting borrower protections
Refinancing is risky if you have federal student loans.
When you refinance federal student loans, the lender you choose pays off your remaining federal debt and issues a new private student loan. It’s a permanent move: You can never turn your private refinance loan back into a federal loan.
“That decision to give up federal loans for private loans is one that is oftentimes regretted by the borrower,” Hoffman says. “Once that decision is made, there is no ‘Whoops, I wish I would have stayed. I could have gotten Public Service Loan Forgiveness. I lost my job and need forbearance.’”
That’s true even if you can get a lower rate through refinance: “Even if a private refi is long-term cheaper for [borrowers], that opportunity cost of losing potential federal protections usually keeps people from moving to the private space,” Ahlenius says.
You also lose access to any future relief programs. For example, borrowers who refinanced their federal student loans before the pandemic did not benefit from the three-year interest-free payment pause that began in March 2020.
Exceptions when federal borrowers may consider refinancing
A high income, so IDR plans don’t offer a lower payment relative to the standard 10-year plan.
Steady employment, so you can be sure you won’t lose your job in the future and need temporary payment relief.
A good credit score, so you can qualify for the lowest advertised interest rates.
You don’t work as a teacher, nurse, government employee or other type of public servant, so you won’t qualify for 10-year Public Service Loan Forgiveness.
You are not working toward any other loan forgiveness programs, including IDR forgiveness.
Certain borrowers with federal parent PLUS loans may also be refi candidates, since these loans have higher interest rates than those doled out directly to students, Tate says.
“If you’re someone who is several years away from retirement, you’re a high earner and you have a fairly low loan balance in relation to your income, then refinancing can make sense, because you may not reach the [forgiveness] finish line before you would pay off the loan under the income-driven terms,” Tate says.
Explore other student loan relief options
Flexible repayment plans. Income-driven repayment plans cap your monthly federal student loan bills based on your income and family size, to as low as $0. These plans are not typically available for private loans.
SAVE lawsuit forbearance. Due to SAVE lawsuits, borrowers enrolled in this federal loan repayment plan have an interest-free payment pause until at least April. If you’re not on SAVE, you can still get this forbearance if you apply for the plan now.
Deferment or forbearance. Temporarily postpone your federal student loan bills by asking your servicer for a deferment or forbearance. Some private lenders offer this option, too.
Federal loan consolidation. You can consolidate multiple federal student loans into a single loan and extend your repayment term up to 30 years, which can lower your monthly payment. Consolidation is different from refinancing, because your loans stay in the federal system and you won’t lose any federal borrower protections.
Set up autopay. Get a 0.25% interest point rate deduction by setting up automatic student loan payments through your servicer. If you have private loans, ask your lender about autopay benefits.
Reach out to your lender for personalized help. Do your research before calling your student loan servicer, explain your situation and ask about relief options available to you.
Becoming disabled can potentially lead to a reduced income, along with an increase in costs. In fact, research from the National Disability Institute has found that households that include an adult with a disability require 28% more income to maintain the same standard of living as those that don’t.
Naturally, this can feel overwhelming, especially when you’re navigating the complex emotions and sometimes complicated logistics of a new disability. But becoming disabled doesn’t have to be a permanent barrier to financial empowerment.
“A lot of times, people see disability as the end of the financial road, and it doesn’t need to be,” says Thomas Foley, Executive Director of the National Disability Institute. “It can just be a pause before you move on with your career and your financial journey.”
This checklist can guide you through some of the most important monetary considerations—from benefits to tax breaks—so you can get your financial situation in order one step at a time.
Step 1: Check your disability insurance policy
No one thinks they’re going to become disabled, especially to the point where they’re unable to work. But when the unexpected happens, long-term disability insurance may help fill gaps in your income.
This kind of disability insurance goes into effect if you can’t work for an extended time due to an injury or a disability. These plans give the policyholder a portion of their lost income—typically 60% to 80% of their monthly salary.
You may be able to purchase insurance through your employer, or you can buy a policy on your own. To make a claim, however, you’ll have to acquire a policy before a disability happens and make all premium payments to keep it in force.
Step 2: Apply for disability benefits
Beyond private disability insurance, some federal and state resources are available to help supplement the income of those affected by a disability. These include Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), and Veterans’ benefits.
Social Security Disability Insurance
One of the most common types of financial help for disabled adults is SSDI. This benefit compensates individuals for lost income due to a disability that has greatly reduced their ability to work—or has required them to stop working entirely.
In 2024, eligible persons may receive up to $3,822 per month—although the exact amount is based on work history. You might be eligible for SSDI if:
You have a disability (including blindness).
You have worked for at least five of the last 10 years.
While these are the general guidelines, there are some exceptions. For example, people under the age of 24 might not have to meet the work history requirement. Learn more about SSDI eligibility requirements, including what you may be able to expect in your specific situation.
Supplemental Security Income
Another common financial resource for people with disabilities is SSI. This federal program provides monthly income for people with disabilities and older adults with little to no income or resources.
Currently, individuals can receive up to $943 a month and couples can receive up to $1,415 from SSI. The monthly amount a person receives is determined by factors such as other income, living situation, assets, and more.
Some states offer additional payments for residents with disabilities that won’t impact their SSI eligibility. These state supplements are meant to cover the necessities of daily living, like food and shelter. Check if your state offers SSI supplements.
Veterans’ benefits
IIf you’re a Veteran, you might be eligible for Veterans Affairs (VA) disability compensation. This is a monthly, tax-free payment for Veterans who suffer service-related illnesses or injuries—affecting either their physical or mental health. In some cases, preexisting conditions are also covered if the Veteran’s service made the condition worse.
Households that include an adult with a disability require, on average, 28% more income to maintain the same standard of living as those that don’t.
What to know when applying for disability benefits
You can apply for disability benefits like SSDI and SSI as soon as you become disabled. Note that you can apply for both programs at the same time—eligibility for one won’t affect eligibility for the other—but only about 10% of beneficiaries qualify to receive both.
However, you’ll have to wait six months to receive SSDI benefits, and this waiting period starts the first full month after your disability began, as determined by the Social Security Administration. For SSI benefits, you’ll begin receiving payments the first full month after you apply or after your eligibility is approved, whichever is later.
To apply for either or both programs, you’ll need to complete an application for disability benefits and an Adult Disability Report. You can submit both forms online or during an interview with a Social Security Administration representative. Your interview may take place either in person at your local Social Security office or by phone.
Make sure your application isn’t delayed by thoroughly reviewing this checklist of necessary information. This optional medical and job worksheet can also help you organize information for your application.
Learn more: How to handle financial challenges when supporting loved ones with disabilities.
Step 3: Get additional financial support if needed
Ultimately, if you are unable to work or need to reduce your hours because of a disability, you may need to reassess your budget and spending. And if you’re coming up short, some programs can help fill in the gaps, like:
Temporary Assistance for Needy Families (TANF): This federal, time-limited program provides financial support for families. Each state manages its own arm of the program and determines the specific benefits and eligibility requirements.
Supplemental Nutrition Assistance Program (SNAP): This federal nutrition assistance program provides benefits for families, enabling them to make eligible food purchases in authorized stores.
While making less money can be discouraging, having a disability doesn’t mean you need to resign yourself to living with a low income or no income forever.
“People with disabilities have the same talent and ambitions as everyone else,” Foley says. “A disability doesn’t mean you can’t retrain for a new or even better job and build whatever financial future you want to have.”
Step 4: Navigate insurance coverage
It’s crucial to have health insurance, especially when you’re dealing with a disability. But if you can’t continue working, or continue working enough to keep your current coverage, you’ll need to find an alternative to employer-provided insurance.
If you’re eligible for SSDI payments, you’ll also gain access to health insurance coverage under Medicare. However, there is a two-year waiting period before this coverage kicks in.
One solution: You may be able to get Medicaid coverage while you wait. The purpose of Medicaid is to offer health insurance coverage to low-income Americans—a group that currently includes more than 10 million adults and children with disabilities.
Medicaid benefits
Medicaid is a joint federal and state program, which means each state runs its own Medicaid program. States determine the type, amount, and duration of Medicaid benefits that eligible residents can receive.
However, there are certain mandatory benefits that all states must provide, such as:
Inpatient and outpatient hospital services
Physician services
Laboratory and X-ray services
Home health services
Learn more: See the full list of mandatory and optional Medicaid benefits.
Medicaid qualifications
You may be eligible for Medicaid based on your household income, disability, and other factors. Specific eligibility requirements vary per state—see if you’re eligible for Medicaid in your state and find out how to apply.
It’s also important to know about Medicaid waivers, which allow states to make exceptions to the typical Medicaid qualifications. Often, these waivers are geared toward providing services that help people with disabilities or medical needs stay in their homes. Check your state’s waiver list for more information.
Finally, if you’re turned down for Medicaid, you may be able to enroll in a private health plan on HealthCare.gov while waiting for your Medicare coverage to start.
“A disability doesn’t mean you can’t retrain for a new or even better job and build whatever financial future you want to have”
Step 5: Assess home modification needs
If you’ve recently become disabled, you might need to consider physical modifications to make your home safer and more functional. This is typically the case when your disability impacts your mobility or requires you to use a wheelchair or other mobility device.
Common home alterations include:
Installing ramps and lifts
Widening doorways
Adding accessible showers and toilets
Lowering counters and sinks
If you need assistance financing these renovations, some federal and local programs may be available, including those that provide grants or low-interest loans for rural homeowners and grants for Veterans. Check with your state to see what local programs exist and if you qualify.
Learn more: Budgeting for accessibility: How to finance a home modification.
Step 6: Ask for work accommodations
No matter your disability, you have the right to the same employment opportunities and to be free from employment discrimination. These rights are protected by the Americans with Disabilities Act (ADA), which can help people with disabilities maintain financial wellness by protecting their source of income.
Under the ADA, employers are required to make reasonable accommodations to ensure people with disabilities have equal opportunity during the application process, can perform the essential functions of their job, and enjoy equal benefits of employment.
Step 7: Learn about available tax breaks
Taxpayers can claim many income exclusions, deductions, and credits, but some are particularly helpful for people with disabilities and their families.
Income exclusions
Income exclusions are what they sound like—money that’s not included in the IRS calculation of your taxable income. Below are two disability income exclusions to familiarize yourself with.
Social Security benefits: If SSDI payments were the only income you received during the year, your benefits are generally not taxable. If you received other income, part of your benefits may be taxable. SSI payments, however, are exempt.
Military and government disability pensions: Certain military and government disability pensions or disability benefits you receive from the Department of Veterans Affairs are not taxable.
Tax deductions
Tax deductions decrease your taxable income, lowering your overall tax liability. If you’ve been affected by a disability, you may be allowed to deduct expenses like these (within some limits):
Impairment-related outlays to help make your work environment more accessible
The cost of home improvements designed to enhance your home’s accessibility
Medical and dental expenses you pay for yourself, your spouse, and your dependents
People who are legally blind also qualify for an extra standard deduction on their taxes ($1,850 for the 2023 tax year). And people who are legally blind and over age 65 qualify for a deduction that’s double that amount.
Tax credits
A tax credit is a dollar-for-dollar reduction in the amount of tax you owe. Below are some common examples.
Credit for the elderly or disabled: You can claim this credit if you are 65 or older during a given tax year or if you have a permanent or total disability.
Earned income credit: You may qualify for this credit if you have earned income (some disability payments qualify as earned income), and it falls within certain limits.
Saver’s credit: You may be able to claim this credit if you make eligible contributions to an ABLE account (see below).
Learn more: Information about a government benefits program that provides tax help for people with disabilities.
Step 8: Consider an Achieving a Better Life Experience (ABLE) Account
ABLE accounts are another helpful financial resource. These tax-favored savings accounts are available to people diagnosed with significant disabilities before age 26. Thanks to the recent ABLE Age Adjustment Act, that threshold will increase to age 46 in 2026.
While the account owner is the designated beneficiary, anyone can contribute to the account. There are some limits on annual contributions, but any interest earned grows tax-free if you use the money for qualified expenses. What’s more, funds in an ABLE account won’t affect eligibility for needs-based assistance programs like SSI and Medicaid.
“They’re a wonderful savings opportunity,” Foley says. “It’s a great way to make sure that someone with a disability has a savings tool that doesn’t affect their public benefits eligibility.”
Learn more: Getting and using an ABLE account, including eligibility details and other common questions.
Banking with a disability
Like many other aspects of life, banking can be affected by a disability, but it doesn’t have to be. Make sure that your bank is inclusive of all abilities—with an accessible website, app, and other user interfaces.
Discover® is committed to creating a seamless experience for everyone, such as by offering Braille credit cards.
A disability doesn’t disqualify you from a bright financial future
If you’ve recently faced a disability or are likely to do so soon, the financial challenges involved may seem daunting. But it’s important to remember that a disability doesn’t need to stand in the way of your financial stability.
“Disability is a normal part of the human experience,” Foley says. “And just because you have a disability doesn’t mean you can’t build a bigger, better, brighter future for yourself and your family.”
If you or a loved one are facing a new or existing disability, it may seem overwhelming. Fortunately, there are resources available that may help you address financial and emotional challenges as they arise.
Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third party or information.
This article is for informational purposes only and is not intended as a substitute for professional advice. For specific advice about your unique circumstances, you may wish to consult a qualified professional, at your expense.
You might think that if you close a loan or credit card account it will no longer affect your credit report, but they can actually stay on your credit report for up to 10 years. During this time period, these accounts can help or hurt your credit score, depending on a number of factors.
Here’s what you should know about closing loan and credit card accounts from your credit report.
Key Points
• Closed credit accounts can stay on your credit report for up to 10 years, impacting your score.
• On-time payments on closed accounts positively affect your credit history.
• Late payments on closed accounts can negatively impact your credit history for seven to 10 years.
• Closing accounts can affect your credit utilization rate and credit mix, influencing your credit score.
• Removing closed accounts with poor payment history or fraudulent activity can build your credit profile.
How Closed Accounts Affect Your Credit
Closed credit accounts and loans can have varying effects on your credit, some positive and some negative, due to the factors that make up your credit rating. Here’s a closer look at three of those that are significant in this situation: your credit history, your credit utilization rate, and your credit mix.
Your Credit History
A closed account on which you made on-time payments will help your credit score by building your credit history. The effect will be less than if it were an open account, but it would be a positive factor nonetheless, since it shows that you can manage credit responsibly. However, if you made late payments on an account that is now closed, the negative impact may linger in your credit history for seven years and up to 10 years if you file for bankruptcy.
Longevity is a factor on your credit report. Credit scoring systems reward borrowers with a longer history of managing debt and repayment. That means that if you close an account and seven years pass, you’ll lose any benefit of having had that account. It won’t make a significant change, but it is another factor to be aware of.
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Your Credit Utilization Rate
Part of your credit rating is based on how much debt or credit you already have. Creditors look at your credit utilization ratio, which is how much credit you have available to you versus how much you actually use. The best case scenario is to not use more than 10% of your accessible credit; otherwise, no more than 30% is a good move.
Two examples:
• Say you have a $10,000 credit limit on your credit card, you might want to limit your balance to $1,000. That’s 10%.
• Otherwise, keeping your balance to no more than $3,000 would be 30%, the upper end of what’s considered a good credit utilization ratio.
If you close a loan or a credit card account, that might reduce the amount of credit available to you, which will increase your utilization rate. If you open a credit card or take out a loan, that will increase the amount of credit available to you, thereby decreasing your utilization rate.
Your Credit Mix
Credit scoring systems, such as the FICO® Score and VantageScore® look at the types of loans you have and how you manage them. These systems reward a mix of loan types, such as installment loans (auto loans and mortgages), and revolving accounts such as credit cards. Eliminating a credit card account or other type of loan (such as when it is closed and eventually drops off your report) could limit your credit mix, and that could negatively impact your credit score. Worth noting though: Credit mix counts for 10% of your score vs. 35% for your payment history (meaning, how successfully you make payments on time).
Why Do Closed Accounts Stay on Your Credit Report?
Both closed and open accounts can contribute to your credit rating as they stay on your credit report. That’s because the credit agencies can gain a fuller picture of your risk as a borrower the more information they have.
Monitoring and understanding your credit report (perhaps with a credit score monitoring app; your bank may offer this) is an important part of your financial wellness.
When to Remove a Closed Account from Your Credit Report
If possible, remove a closed account from your credit report if it has a poor payment history. Also, remove any accounts that are found to be fraudulent. If an account shows that you made regular, on-time payments, don’t remove it because it will be helping your score.
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How to Remove a Closed Account from Your Credit Report
A few factors affect your credit score; one of which is your credit history. As noted above, your credit history shows the loans and credit cards you have obtained in the past seven to 10 years, along with your repayment patterns. Even closed accounts are part of that narrative for the stated period of time.
That said, there may be a way to remove a closed account from your credit report, which you might want to do if it is having a negative effect. Here are some options.
1. File a Dispute if There Is an Error on Your Credit Report
It might be that you notice a fraudulent account when you check your credit report. If that is the case, you can remove the record by submitting a dispute in writing with each of the three credit bureaus (Equifax®, Experian®, and TransUnion®). You must include supporting documents. The bureaus will investigate your complaint and update your credit score if there is fraudulent data.
2. Contact the Creditor and Pursue a Goodwill Deletion
Another way to remove a closed account from your credit report is to directly contact the creditor that’s involved and ask them to remove the account from your credit report. (This is sometimes known as a goodwill letter or goodwill request.) The creditor will have to contact the credit bureau(s) directly to do so. You will be more successful if you have a positive credit history and relationship with the creditor.
3. Wait It Out
In time, a closed account will no longer be reflected on your credit report, but it might take seven to 10 years. The good news is that the accounts that stay the longest are usually ones that you closed in good standing, and these will positively influence your credit score.
Recommended: Why Did My Credit Score Drop After a Dispute?
What Does “Account Closed” Mean on a Credit Report?
“Account closed” on your credit report indicates an account that is no longer active. There can be several reasons for an account being closed.
• Perhaps it was an installment loan that you paid off.
• You might have opened a credit card account and then decided to close it (maybe you weren’t using it much).
• The creditor closed it, which could be positive (you paid off a loan) or negative (you weren’t paying your bills in a timely manner).
These are typical scenarios that lead to seeing “account closed” on your credit report.
How Long Will a Paid-off Account Take to Show up on Your Report?
Lenders usually update the credit report agencies with closed account information at the end of a billing cycle. Thus, it could take one or two months before a paid-off account is reflected on your credit report.
How Long Does a Closed Account Stay on My Credit Report?
As noted above, how long closed accounts stay on your credit report can vary.
• Accounts closed in good standing (paid on time and in full) can remain on your credit report for up to 10 years.
• Accounts closed due to nonpayment (these include collection accounts, some bankruptcies, and debt settlement) remain on your credit reports for seven years from the first missed payment or from being turned over to collections. The exception is Chapter 7 bankruptcy, which usually stays on your credit report for 10 years.
Practice Good Credit Habits Going Forward
Here’s advice that can help you manage existing credit card and loan accounts well.
• First, it’s always wise to take control of your budget. Whether you do that with the 50/30/20 budget rule or a financial tracking app, keeping on top of your income, your spending, and your saving can be a money-smart move.
• Check your credit score regularly to make sure there is no fraudulent activity. You might aim for an annual review.
• Extend your credit history as much as you can with accounts that are and have been in good standing. This means it’s probably in your best interest to occasionally use a credit card account and keep it in good shape vs. closing it because you don’t use it often. This can reduce your available credit and possibly lower your debt utilization ratio.
One good idea can be to use a credit card for predictable expenses, such as streaming services, and set up automatic payments. That way, you will be paying a set amount each month and building a positive credit history.
These moves can help you keep your financial profile in good shape.
The Takeaway
Closed credit accounts will stay with you for a long time, seven to 10 years usually. Keep accounts that you have owned for a long time open and in good standing whenever possible. If you have fraudulent accounts on your credit history or ones that were not managed well, you might take steps to have them removed and possibly build your credit profile. Keeping tabs on your credit score and your budget can be easy with the right tools, like those SoFi offers.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
See exactly how your money comes and goes at a glance.
FAQ
Can I get closed accounts removed from my credit report?
You can remove a closed account from your credit report if you suspect it is fraudulent by filing a dispute with the three credit bureaus. You can also contact a creditor directly and ask them to remove a closed account. However, they are under no obligation to comply with this kind of request for a “goodwill” deletion. Alternatively, you can wait for seven to 10 years, after which closed accounts will fall off your credit history.
What is the 609 loophole?
The 609 loophole is a tactic that some people think will remove bad debt history from their credit reports. A section of the Fair Credit Reporting Act states that you can write a letter to gain documentation on what you may believe is an incorrect entry in your credit history. The 609 letter theory is that if a credit bureau cannot produce a piece of information, such as the original signed copy of your credit application, they have to remove the disputed item because it’s unverifiable. However, these steps are not the same as a dispute. Also, if you have legitimate debt, even without this documentation, the debt may remain. In other words, this process is unlikely to provide a shortcut to building your credit.
How long before a debt is uncollectible?
At which point a debt can no longer be collectible varies based on the type of debt and the state you live in. It is often between three and six years, but it could be as long as 20 years. After the statute of limitations that applies, a debt collector can no longer sue you for repayment, though some might still try to collect.
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If you are like many people, you may have asked yourself at some point in life, “Will I be rich one day?” No one knows for sure what the future holds, but there are a few things you can do to increase your chances of becoming a millionaire.
One of the best ways to amass wealth is to invest in assets that will appreciate over time. But while that sounds good, finding a starting point can be challenging for some. For example, you can start your own business or work hard to climb the corporate ladder, but which is the better option? And you’ll want to invest the money you earn. But where?
Whatever you do, it’s smart to remember that it’s okay to take risks and make mistakes; learning from your experiences is a critical component of success. Above all, remember that wealth accumulation is a marathon, not a sprint. It takes patience, commitment, and perseverance to achieve financial security.
Table of Contents
Key Points
• Early financial success, such as earning money from a young age, can set the stage for future wealth.
• Taking decisive action and managing finances proactively are common traits among those accumulating wealth.
• Outspokenness and a unique personal style often distinguish wealthy individuals in social settings.
• A strong sense of urgency and goal-oriented behavior are typical among successful wealth builders.
• Distinguishing between needs and wants is crucial for effective financial management and wealth accumulation.
What Is a Sign of Wealth?
Often, specific aspects of one’s physical appearance such as luxury cars and designer clothes are taken as a sign of being rich or wealthy. Unfortunately, these signs aren’t always reliable. For example, some people may live in an extravagant home, giving off the appearance of wealth, but it may simply mean that they can access money — perhaps through credit, savings, or even family.
Real signs of wealth are often more attitudinal, and many can be cultivated through patience and practice. Here are a few people who were early millionaires due, in large part, to their drive and focus.
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Examples of Millionaires Under 30
With the advent of the tech industry, smart investments, business ventures, or inheritances — i.e., the great wealth transfer — millionaires under 30 are becoming increasingly common. Here are three examples of millionaires who earned their fortunes before turning 30.
Mark Zuckerberg: Zuckerberg created Facebook at age 19 while attending Harvard University. The idea was to match photos with the names of other students. And in just a few short years, Zuckerberg became a self-made millionaire at age 22.
Sergey Brin: Brin is a Russian American computer scientist who, at the age of 25, co-founded Google, Inc., and became a millionaire. Google is one of the world’s most valuable companies, and today, Brin’s net worth is estimated to be upwards of $120 billion.
Alexandr Wang: Wang founded Scale AI in 2016 as a way to analyze data far faster than any human could. Today, Scale AI’s technology has been used by the U.S. Airforce and U.S. Army, as well as 300+ companies. Today, Wang’s net worth is estimated to be over $2 billion, and at age 27, he’s among the youngest self-made billionaires.
Recommended: Does Net Worth Include Home Equity?
9 Signs of Wealth to Look Out For
In the U.S. 1% of earners take home nearly 30% of the country’s income, so it’s essential to know what signs to look for when trying to identify if someone is wealthy. While there’s no one-size-fits-all definition of wealth, some cues can give you a good idea of whether you or someone you know is doing well financially. (And a net worth calculator can help you tally up your own assets.)
Here are six signs of wealth to look out for that indicate you’re on track to becoming wealthy:
1. You’re an Overachiever
It’s hard to be modest when you’re an overachiever. You know you’re good at your work and are not afraid to let everyone know. Overachievers work hard and try harder. While this may make some people uncomfortable, it comes naturally to you.
2. You Started Making Money At a Young Age
It is not uncommon to see young adults with successful careers in today’s society. While some people played with toys as a child, others learned how to make money. For example, it could mean that you had a paper route or a babysitting business.
Making money at a young age, or any age for that matter, is not always easy. But an early start in earning, tracking your money, and investing can put you on an accelerated schedule when it comes to building your wealth and becoming a millionaire.
3. You Take Action
There will be times when things happen that are out of your control. You may feel stuck and as if you have no way to change your circumstances. However, these are the times when you must take action to create the life you want to live. For example, it might mean organizing your finances to get what you want. And, sometimes you’ll have to take some risks and go for it. It can be scary, but it’s worth it to achieve your goals.
When faced with a difficult situation, it’s essential to remember that you always have a choice. You can choose to give up, or you can choose to fight for what you want. Only by taking action can you make progress and take a step towards achieving financial wellness. So don’t be afraid to step up and take on whatever life throws your way — you can do it!
4. You Are Outspoken
In a society where people get judged by how much money they have, it is no surprise that many go out of their way to keep up appearances. And while some may try to blend in with the wealthy crowd, a wealthy person will often stand out with his unique style or outgoing sense of humor. Wealthy people tend to feel less inhibited and are more likely to speak their minds. They may also be less concerned with the rules and more likely to take risks.
5. You Possess a Sense of Urgency
When it comes to the wealthy, there are a few telltale signs that set them apart. One of these is their sense of urgency — they don’t like wasting time and are always moving forward. This urgency allows them to set financial goals, achieve them, and maintain their wealth. It’s also one of the reasons why they may seem constantly stressed out — they’re always trying to do more.
6. You’re Focused More on Saving Than Earning
It doesn’t matter if you earn $50,000 or $250,000 a year. Unless you consistently spend less than you make, you’ll never get ahead financially. People who focus on their budget and saving their disposable income understand how to live within their means and focus on what’s most important: saving money for the future.
7. You Know the Difference Between Needs and Wants
In our materialistic society, getting caught up in the “must-have” mentality is easy. Advertisements are everywhere, and social media posts tell us we need the next latest and greatest products. It can be challenging to discern between the things we need and want.
A sign of a wealthy person is their ability to distinguish between the two. They know which items are essential for their well-being and those which would be nice to have. Advertising or peer pressure doesn’t work on rich people, and their possessions don’t rule them.
Recommended: Should I Sell My House Now or Wait?
Spiritual Signs You Will Be Rich
Are there spiritual signs that you can be a wealthy person? Some people believe steadfastly in spiritual and other signs of wealth and luck. Here are a couple of examples:
Gravitating to the Lucky Number, 8
In Chinese culture, the number 8 is considered a lucky number. Individuals who gravitate toward this number may believe it will bring them good fortune. Some people might even go as far as to change their phone number or social media handle to include the digit 8.
A Psychic Confirms Wealth is Coming
Some people consult psychics to get guidance on anything from love to health and even money. While many psychics will say they can tune into your energy and give you specific information about your future, and many people believe their predictions, you may be better off putting the money you’d pay the psychic into savings.
Pros and Cons of Having Signs of Wealth
There are very few times when it can be helpful to show off your wealth to others. Indeed, showing off can make others feel intimidated. Additionally, it can attract unwanted attention from criminals or others who want to take what you have. And having too many signs of wealth can make you a target for scams or other fraudulent schemes.
The Takeaway
If you identify with any of these habits you’re likely well on your way to building a significant amount of wealth. However, it is essential to remember that wealth accumulation is not a one-time event; it’s a way of life. It’s something you’ll need to make a habit of, if you want to succeed. For many people who work hard, stay focused, and are disciplined, it is possible.
And as you’re building your wealth, tracking your income and expenses is one of the primary ways to manage your money. SoFi’s money tracker app can help you keep track of your funds so you can make the best spending decisions and start building your very own fortune today.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
See exactly how your money comes and goes at a glance.
FAQ
At what point is someone considered wealthy?
There is no magic dollar amount that indicates someone is wealthy and one person’s definition may not be the same as another’s. But in 2022, the top 1% of earners took home an average of $785,968, according to the Economic Policy Institute. Of course the amount you earn is only part of the wealth story. How much of your income (or inherited wealth) you retain is affected by your spending habits.
What are invisible signs of wealth?
People who are stealthily wealthy still might have a “tell” that gives them away. Use of private banking or wealth management services would be one example. Another might be not working but being able to maintain an expensive hobby such as riding horses or boating. Buying bespoke products, whether tailor-made clothing or custom-designed furniture, is another subtle giveaway.
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In addition to spoiling them with toys and ice cream, many grandparents also want to help secure a solid financial future for their grandkids. That can mean setting up a custodial account, considering tax-advantaged savings options, and exploring other ways to start building a child’s wealth.
Below, you’ll learn about the different ways to save money for your grandkids, plus the pros and cons of each.
Why Open an Account for Grandchildren?
Sure, your grandkids might prefer a new video game or Lego set, but you’ll do them a favor, today and tomorrow, by opening a savings account for them. Here are a couple of good reasons to open a savings account for your grandchildren.
Teaching Financial Literacy Early
Money management skills are crucial, but personal finance education can be virtually nonexistent during school. It’s not typical for schools to teach kids how to balance a checkbook, how to invest in stocks, how to save for a down payment on a house, and how to file taxes.
Thus, it’s up to parents — and grandparents — to equip the next generation with financial literacy. Opening an account for your grandchildren can help teach them concepts such as interest, budgeting, and investing.
Getting a Head Start for College and Life
While teaching children how to manage money can give them a head start on the path to financial wellness, so too can providing them with a nest egg that can grow over time through various savings and investing accounts. Consider these options:
• When you open a savings account for grandchildren early on, they could wind up having a sizable chunk of cash in young adulthood to put toward their first car or even a house down payment.
• A 529 college savings plan could help them avoid taking on too much debt from student loans.
• Retirement accounts, such as a Roth IRA, can help them achieve their retirement goals, even if those are more than half a century away. Remember, the earlier someone starts investing, the more they stand to earn in the long run.
Earn up to 4.60% APY with a high-yield savings account from SoFi.
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Types of Accounts to Consider
Grandparents have many options when it comes to opening an account for their grandchildren, including:
Savings, CDs, and Bonds
Many banks and credit unions offer savings accounts designed for kids. Do a quick search for “best savings accounts for grandchildren” or you could start by seeing if your own bank offers such an account.
Having money in savings at an early age will let your grandkids benefit from compounding interest, especially if you find a high-yield savings account for kids.
You can also consider opening a certificate of deposit (CD) or purchasing savings bonds for your grandchildren. CDs are savings accounts that typically provide a higher interest rate than a standard savings account in exchange for keeping your money in the account for a fixed period of time. Savings bonds, issued by the U.S. Department of Treasury, are a very low risk, longer-term investment that provides interest in return for lending the government money.
With both of these options, the money is less liquid, but if the CD or bond matures when your grandchild is older, they stand to have a reliable source of funds they can use in future years.
Custodial Accounts (UGMA/UTMA)
Beyond savings accounts for grandchildren, you can consider helping your grandkids actually start investing with a custodial account, through the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA). Once your grandchild is between 18 and 25 (the exact age varies by state), they’ll take control of the account.
These accounts are taxable (meaning you will owe taxes on interest earned) and have no contribution limits. They’re an easy way to purchase stocks, mutual funds, and other securities for your grandchild — and you can even transfer your own securities into the custodial account.
529 College Savings Plans
The cost of college tuition continues to skyrocket, meaning it’s never too early to start saving. There are several benefits of a 529 college savings plan: While the contributions to this qualified tuition plan aren’t tax-deductible, your grandchild’s distributions from the account tax-free at the federal level, as long as the money is used for qualifying expenses.
A 529 college savings may have “college” in the name, but your grandchild can also use it for other higher education programs, such as a trade or vocational school. You can also roll over 529 funds into a Roth IRA if your grandkids don’t use all (or any) of the funds.
Contributions to a grandchild’s 529 account are not deductible on your federal income tax return. However, close to 30 states offer either a deduction or credit for this kind of contribution. Another consideration: There’s an annual limit to how much you can give as a gift without triggering taxes. For 2024, for instance, the figure is $18,000 per giftee. If you were to put more than that into a 529 for a grandchild, you would have to pay a gift tax bill.
IRAs for Minors
Similar to custodial investment accounts, you can open custodial retirement accounts for your grandchildren, including a traditional IRA and a Roth IRA. While your grandkid won’t benefit from this account for decades, starting them early on the path to retirement savings means they could have considerably more money to work with when they reach retirement age.
However, it’s important to note that opening an IRA requires the child to have earned income in a given year. For teens, this can make sense. For a newborn, it is unlikely to be a viable option.
When making contributions to an IRA for a grandchild, note that the amount you deposit is subject to a gift tax exclusion before it becomes taxable. For 2024, this allows up to $18,000 per giftee. Funds given beyond that amount might mean you, the donor, are liable for taxes, though other factors will need to be considered to determine any tax burden.
Choosing the Right Account
Not sure how to choose the right savings account for your grandchildren? Here are some things to consider:
Comparing Interest Rates and Fees
If you’re opening a savings account, compare interest rates — you want an account with a high yield so that the money compounds more quickly over time. For example, currently the average interest rate for standard savings accounts is 0.45%, while the figure for high-yield savings accounts (often from online-only banks) can be several times that number.
For custodial accounts, you’ll want options with low or no fees. It can be wise to shop around and see what options you have from different banks and brokerage firms.
Recommended: How Old Do You Have to Be to Open a Bank Account?
Accessibility and Withdrawal Rules
Certain accounts allow your grandchildren to access funds sooner, while others (like IRAs) have strict rules about when they can withdraw funds and what the funds can be used for (as is the case with 529 plans). Think about the specific timeline and use case you envision for your grandchildren. Sometimes, opening more than one type of account makes sense, depending on how many goals you want to enable for your children’s kids.
Tax Implications and Benefits
Some accounts have tax-deductible contributions; others have tax-free withdrawals. For example, withdrawals from a 529 account are not usually taxable, provided they are used for qualified educational expenses. With a Roth IRA, withdrawals made after your child is older than 59 ½ (as hard as that may be to imagine) are not taxable. With a traditional IRA, taxes are paid when the money is withdrawn, usually in retirement, and are taxable.
Speaking with a financial advisor can help you understand the tax implications of each type of account you’re considering to better understand what you might pay — and what your grandchild might pay.
Setting up and Contributing to the Account
Ready to open a savings account for your grandchildren? Here’s how it works:
Opening and Funding the Account
Follow the bank’s or investment firm’s guidelines for opening the account. You will likely need some specific information from the grandchild’s parents to open the account. You’ll also need to deposit money into the account to start the nest egg. Custodial accounts may even let you transfer your own assets into the account.
Automatic Transfers and Recurring Contributions
If you’d like, you may be able to set up recurring transfers into the account. Perhaps you want a recurring transfer every holiday season or on your grandchild’s birthday. Work with the financial institution to set up these contributions — and perhaps find out how other loved ones might be able to contribute as well.
Monitoring and Managing the Account
After opening an account, it’s important to monitor it and see how the funds grow over time. Just as importantly, once your grandchild is a little older, it’s a good idea to sit down and review the account with them:
• If it’s a savings account, walk them through how compound interest works.
• If it’s a 529 plan, talk to them about college costs and how student loans work.
• If it’s a custodial account, talk to them about the basics of investing and the importance of saving for retirement.
The Takeaway
It’s never too early to start thinking about your grandchild’s future. Savings accounts, 529 plans, and custodial accounts offer several ways for you to give them money that will help them with college, general expenses, and even retirement.
While saving for grandkids is important, it’s also crucial that you take care of your own finances.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.
FAQ
What are the contribution limits for custodial accounts?
There are no contribution limits for UGMA/UTMA custodial accounts, but you can only contribute up to a certain amount to avoid gift-tax implications (this changes each year). Contribution limits apply for custodial IRAs just as they would for regular IRAs.
Can grandparents open a 529 plan for grandchildren?
Yes, grandparents can open a 529 plan for grandchildren. If the grandchild’s parents have already set up a 529 plan, grandparents can also contribute to that plan directly. This will simplify account management and withdrawals for the recipient of the funds.
What happens to the account if the grandchild doesn’t need the funds?
If a grandchild doesn’t need funds from a 529 plan for college, they can still use them for trade or vocational schools or roll them into an IRA. Grandparents can also reassign the 529 plan to another grandchild.
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In the evolving landscape of employee benefits, HR professionals are increasingly recognizing the importance of supporting their workforce in managing student debt. With the resumption of federal student loan payments last year, the nearing end of the federal on-ramp, and the introduction of innovative matching programs, there’s a pressing need for HR teams to stay informed and proactive. Here’s a closer look at the current state of student loan benefits and how HR can effectively implement these programs to enhance financial wellness in the workplace.
Understanding the Impact of Student Loan Debt
Student loan debt remains a significant burden for millions of Americans, with many employees seeking positions that offer not just a paycheck, but also help in managing this debt. Recent surveys, such as the Employee Benefit Research Institute’s 2022 Financial Wellbeing Survey , indicate that nearly three-quarters of employers are now offering or planning to offer student loan debt assistance or tuition reimbursement programs. This shift underscores the growing recognition that student loan benefits offer significant value — not just for workers but also employers. SoFi at Work’s 2024 Future of Workplace Financial Well-Being study found that employees spend a full 8.2 hours dealing with finances every week while at work.
Analyzing the currently available data from the Department of Education (ED), we found that while total loan forgiveness approved by the Biden-Harris Administration has jumped to $167 billion for 4.75 million borrowers , that still leaves roughly $1.73 trillion in student debt outstanding for 43.2 million borrowers. This means that there are still a significant number of individuals in the workforce and about to enter the workforce who will still be working on paying down their student debt.
This will be particularly felt in a few key talent segments. Older borrowers represent an increasing proportion of borrowers who carry federal student debts, both in terms of the number of borrowers and the amount they owe (14% of borrowers are aged 50-61 and have federal student debt with an average balance of $44.2K). Additionally, among borrowers under 40, first-generation borrowers are about three times more likely to be behind on their payments than borrowers whose parents also attended college.
HR professionals should also be aware of the upcoming end of the federal student loan “on-ramp” period and the grace period for 2024 graduates. Specific to this year, as federal student loan repayments resumed, the ED introduced a temporary “on-ramp” period until September 30, 2024. During this time, borrowers who fail to make payments do not face default. The program was aimed to assist borrowers who might find it challenging to resume payments after the pause of almost four years.
Shortly after the on-ramp ends, most of the graduating class of 2024 (those who tossed their caps in April, May, and June this year) will experience the end of the standard federal loan grace period. Most federal student loan types have a six-month grace period after graduation, leaving school, or dropping below half-time enrollment. This means these employees will likely start their repayment journeys in September, October, and November.
It is shaping up to be a busy Open Enrollment season!
Recommended: Helping Employees Make Smart Student Debt Decisions: The Urgent Need for HR Support
Legislative Enhancements: The CARES Act and Secure 2.0 Act
The introduction of the CARES Act and the subsequent Secure 2.0 Act has provided HR teams with new tools to support their employees. Under the CARES Act, employers can contribute up to $5,250 annually per employee towards student loans on a tax-exempt basis through 2025. By enhancing Section 127 benefits, this provision not only aids employees but also offers payroll tax exclusions for employers, making it a mutually beneficial arrangement.
Further expanding the horizon, the Secure 2.0 Act, effective from January 2024, introduces the option for employers to match their employees’ student loan payments with contributions to their retirement accounts. Companies like Chipotle and Kimley-Horn have already adopted this innovative approach, allowing employees to address their student debt while enhancing their retirement savings, presenting a win-win scenario for financial wellness.
Recommended: How Does an HR Team Implement a Student Loan Matching or Direct Repayment Benefit?
Implementing Student Loan Repayment Benefits
For HR professionals looking to implement or enhance student loan repayment benefits, several key considerations must be addressed:
Direct Educational Assistance Benefits (Section 127 Provisions)
• Determine the contribution level. While the maximum tax-exempt direct contribution stands at $5,250, companies can start with smaller amounts, such as $25 to $100 per month, which can still significantly reduce the interest burden for employees.
• Consider tenure and eligibility. Some companies may tie these benefits to tenure, requiring a certain period of employment before employees can qualify, which can aid in retention.
• Ensure compliance. While there are still several open questions for the IRS to clarify, it’s crucial to have a program document that complies with IRS regulations and coordinates with any other educational assistance programs offered by the employer.
Recommended: Understanding Educational Assistance Programs: A Comprehensive FAQ
• Understand the timeline for qualified student loan payments. When setting up a qualified student loan match, plan advisers and sponsors must be clear on the timing of when these payments may be reported. This is crucial because the timeline for these matching contributions differs from that of a traditional 401(k) deferral match. Understanding and communicating these timelines can ensure smooth implementation and compliance.
• Don’t exceed matching fund limits. When it comes to the level of matching funds that are available, it’s important to note that contributions that exceed the 402(g) limit, which is the maximum amount of money employees may defer to their 401(k) plan each year, may not be matched. For 2024, this limit is set at $23,000. The traditional 401(k) rule for matching, which allows matching only up to this limit, remains in effect. This ensures that the matching contributions are made within the legal financial thresholds.
By carefully considering these aspects, HR professionals can effectively implement student loan repayment benefits that help employees manage their debt and align with regulatory requirements and fiscal prudence.
The Role of HR in Facilitating Smart Debt Management Without a Formal Program
Beyond implementing direct financial benefits, HR can be pivotal in educating and supporting employees in managing their student debt. If your organization is not yet ready to implement Direct Educational Assistance Benefits or Qualified Student Loan Payment Matching programs, consider starting with providing resources like the SoFi at Work’s Navigating Your Student Debt Workbook and organizing workshops on student loan management. Both offerings can empower employees to make informed decisions about their repayment options.
In addition, the SoFi at Work Guide to the Restart of Federal Student Loan Repayments was developed explicitly to help borrowers reestablish their financial footing after the federal loan pause. This relevant guide provides essential information on smoothly transitioning back into making repayments. Additionally, it includes valuable resources and advice on budgeting, saving, and enhancing financial health overall.
Recommended: The Student Loan Crisis and Its Impact on Borrowers
The Takeaway
As we navigate a landscape where student loan debt remains a critical issue for many workers, the role of HR in facilitating debt management and financial wellness is more important than ever. By leveraging legislative tools and providing educational support, HR professionals can significantly impact their employees’ financial health and, by extension, their overall job satisfaction and loyalty. This proactive approach not only enhances the company’s appeal to top talent but also fosters a supportive workplace culture that recognizes and addresses the real-world challenges its team members face.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Overdraft and non-sufficient funds (NSF) fees have a lot in common. Both fees are triggered when there’s not enough money in an account to cover a transaction, except with overdrafts, the transaction usually goes through and with NSF, it’s canceled.
Both of these bank fees can be avoided with a bit of focus and practice. Read on to learn the details.
What Are Overdraft Fees?
When a bank account balance is negative (meaning transactions exceed deposits), the account holder is often charged an overdraft fee. The transaction goes through, but the account holder owes the bank the cost of the transaction to bring the account back to zero, as well as the overdraft fee set by the bank.
Typically, overdraft fees will continue with each transaction until an account’s balance is out of the red. That means if an account holder is unaware of the overdraft and goes on using the card without making a deposit, they could be hit with a fee for each charge, no matter how small.
The average overdraft fee is currently $26, but it can be as high as $39, which can add up quickly when someone isn’t paying attention to their checking account balance. It’s worth noting that the government is considering capping these fees at a lower figure, which would benefit consumers.
How Do Overdraft Fees Work?
Overdraft policies vary from bank to bank, but typically they kick in when a debit card or checking account transaction exceeds the amount held in a bank account. There is usually a limit for how much overdraft is covered, say $50.
When the transaction goes through, the bank has a few choices:
• If the account holder has opted for a tool like overdraft protection, they may be shielded from overdraft fees up to a certain amount
• If the account is in good standing, or if the account holder has never over drafted before, the bank may choose to waive overdraft fees in this instance (or you might be able to request this and see if you can avoid overdraft fees).
• If the account holder has a history of over drafting, or is relatively new, the bank may choose to charge the overdraft fee.
When You Could Get Hit With an Overdraft Fee
It’s not just debit card purchases that can set off an overdraft fee. If the account holder doesn’t have enough cash in their checking account, any of the following transactions could lead to an overdraft fee:
• ATM withdrawals
• Checks
• Autopay bill payments or withdrawals
• Transfers between bank accounts
As mentioned above, once an account holder overdraws, the bank may continue to charge subsequent overdraft fees on the account until the balance is restored through a deposit.
💡 Quick Tip: An online bank account with SoFi can help your money earn more — up to 4.60% APY, with no minimum balance required.
What Are NSF Fees?
On the surface, it’s hard to tell the difference between overdraft and NSF fees. Both fees occur when an account doesn’t have enough cash to cover a transaction.
However, an NSF fee is charged when an account doesn’t have enough money to cover a transaction and the transaction is canceled or rejected.
The average NSF fee is currently $20, but some banks may charge considerably higher.
How Do NSF Fees Work?
An account holder might trigger an NSF fee instead of an overdraft fee if they:
• Opt out of or never signed up for overdraft protection
• Already exceeded the bank or credit union’s overdraft protection limit
• Write a check that’s more than the balance of the account
When You Could Get Hit With an NSF Fee
NSF fee policies vary by banking institution, but an account holder is more likely to be charged in the following situations:
• Check writing. When someone writes a check for more than the account’s balance, the check bounces, and the transaction won’t go through. The account holder will be charged an NSF fee by their bank, and they may be charged an additional fee by the bank or entity that tried to cash the check.
• ACH payments. An ACH payment, or Automated Clearing House Network payment, can be an easy way to transfer money or pay someone, but if the transferring bank doesn’t cover ACH payments, the transaction could be canceled and the NSF fee charged.
Get up to $300 when you bank with SoFi.
Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.60% APY on your cash!
What Are the Differences Between Overdraft and NSF Fees?
NSF and overdraft fees are commonly lumped together as general bank fees, but they are not the same. Here’s the difference between overdraft and NSF fees:
NSF Fee vs. Overdraft Fee
NSF Fee
Overdraft Fee
Average Fee
$19
$26
Transaction goes through?
No
Yes
Charged repeatedly until corrected?
No
Yes
Can it be avoided through overdraft protection?
No
Yes
Tips for Avoiding Overdraft and NSF Fees
Overdraft and NSF fees are frustrating for many people because they fall into the category of bank fees you should avoid — and you can easily do so with a few simple practices.
1. Setting Up Email and Text Alerts
Many banks and credit unions offer email and text bank alerts that account holders can set up to notify them of low balances. For example, an account holder could set up an alert when their checking account balance falls below a certain amount.
With enough notice, account holders have time to transfer money into the account to cover upcoming charges or auto-debits.
2. Utilizing Direct Deposit
Setting up direct deposit with an employer means paychecks go directly to a bank account on payday. It’s a nearly immediate payment, opposed to waiting for a check by mail then depositing it at the bank. This could save someone from overdraft fees, especially if paychecks and major bills occur at regular intervals.
3. Having a Savings Cushion to Prevent Overdraft
Keeping a healthy cash cushion in a checking account can prevent it from dropping dangerously low. While it’s not best practice to keep tons of extra cash in a checking account (as these accounts often have low or no interest), keeping a few hundred extra in the account could keep someone from overdrafts when they need to make a transfer or forget about a check they wrote.
4. Checking Finances Regularly
While automation can help, nothing beats a regular check-in for managing your bank account. Consider reviewing account balances at least once a week. It can help you keep those numbers in mind when a large transaction or purchase comes up.
Recommended: Is Overdraft Protection Worth It?
5. Utilizing a Budgeting App
Keeping a budget is an important part of financial wellness. Not only does it involve knowing the balance of bank accounts, but it can also prevent people from over- or unnecessary spending that sends an account into overdraft. Some budgeting apps come with alerts to notify users when account balances are low. One good resource: Your financial institution. See what it offers.
The Takeaway
Both overdraft and non-sufficient funds (NSF) fees occur when your bank balance drops below zero into negative territory. The key difference is that with overdraft fees, the transaction is typically completed, while with NSF fees, the transaction is usually rejected.
You might look for a bank which doesn’t charge overdraft fees up to a limit to minimize the impact of these charges and take steps to always keep your account with a positive balance.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.
FAQ
What is the difference between overdraft and non-sufficient funds fees?
The difference between overdraft and NSF fees is the success or failure of the transactions. Overdrafting will allow the debit to clear. With an NSF, the transaction does not go through.
Is an overdraft fee or an NSF fee more expensive?
Currently, NSF fees average around $19, while overdraft charges are about $26.
How can you avoid overdraft and NSF fees?
You can avoid overdraft and NSF fees by keeping a close eye on bank account balances and choosing a bank that offers overdraft protection or forgiveness.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Each of us has our own agenda in terms of what makes stashing our cash away worthwhile. For some of us, it’s the anticipation of doing something fun or buying something beautiful. For others, it’s all about using our money to secure some quality of life and peace of mind.
Regardless of what gets you saving, whether you’re stashing funds to buy a new computer, a used convertible, a house, or even retirement funds to ensure your future, you’ll be honing your saving skills and likely boosting your financial wellness as well.
Why Saving Is Important
The importance of saving cannot be overstated; it’s a very big part of successful money management. Consistently putting away cash can make a major difference over time, especially in your quality of life. By planning and prioritizing what expenses to fund, you’ll have the means to achieve your goals. It’s incredibly rewarding when you make a plan for your money and then realize it.
To jumpstart your savings, try one or more of these creative strategies.
• Budget first. The mere mention of the word budget can stress some people out, but a budget is simply a plan for how you will spend your money. Having a strategy in place can really help keep your spending and savings on track. There are a number of methods you can use to budget, including the good old cash envelopes system and the 50/30/20 rule, as well as a number of mobile apps. Research your options online, and find the one that works best for you.
• Automate savings. One of the easiest ways to ensure you’re saving toward your goal may be to automate your savings. This can take much of the stress out of saving. For instance, you could set up an automatic bank transfer from your checking to your savings account every payday.
• Save consistently. Once you open a bank account, over time, you have a great chance of meeting your goal. Maybe it’s only $5 or $25 a pop, but contributing to your savings account regularly is vital. Be consistent and trust the process.
• Save bonuses, tax returns, and other unexpected windfall amounts. These extras can give your savings account a tremendous boost.
• Match your own purchases. For every amount that you spend on a treat, transfer that same amount into savings.
• Save every $5 bill. By setting aside every $5 bill you encounter (as change from a purchase, from an ATM, etc.), you can save quite a bit in a year’s time.
• Use the 30-day rule to control impulse purchases. Write down that shiny new thing you want, whether it’s a pricey new mobile phone or a designer bag, and wait 30 days to see if you still want it. You may find that your urge to spend on it has passed. If so, you can put the money you save this way into savings to fund something that’s on your wishlist.
Recommended: How Much of Your Paycheck Should You Save?
25 Smart Items to Save Up for
Spending money according to your own personal preferences — whether it’s a vacation, a new car, or a comfortable home for your family — should be the driving force behind your saving goals. This is how to make saving fun: Make a list of cool things to save up for. Create a vision board if you prefer; the idea is to entice yourself to perhaps pass up some unnecessary spending (takeout meals, a multitude of streaming services, and so on) and achieve those things you really crave. Not sure what to start saving for? Here are 25 ideas to get you going.
1. Vacations
You may have heard that vacations are good for both your physical and mental health. Even the act of looking forward to a vacation can improve your happiness. Whether the vacation you crave is a week at a nearby beach, a long weekend with your college besties, or a jaunt through Europe, the prospect of travel can be great motivation to save money.
2. Brand New Electronics
Buying new electronics isn’t just a leisure pursuit. New electronics can help with your productivity and ability to earn an income (or a higher one). It may be worth it to you to save for and invest in tools, such as a new laptop or video equipment, that can make your life better.
3. Starting a Business
If starting a business and becoming your own boss is a dream of yours, savings can go a long way toward making it happen. In fact, 82% of small businesses fail because of cash flow problems. Start accumulating capital so you can hopefully avoid becoming part of that statistic.
4. Home Maintenance
Keeping your home in tiptop shape can not only make living in it more enjoyable and enhance its looks and curb appeal, it can be helpful when you decide to sell it. Maintenance can include such things as getting your furnace and air conditioner checked regularly and getting your carpets cleaned, to lawn care, landscaping, and painting.
5. Weddings
This is a popular motivation to save. Most people dreaming of their big day know that it doesn’t come cheap. The average cost of a wedding in 2024 was about $33,000, according to one survey. Saving for this expense means you can celebrate the special day with loved ones, just the way you want to, while minimizing money stress.
6. Pet care
Owning a pet is enjoyable and rewarding, but it can also be expensive: The annual costs of owning a dog can run anywhere from $1,000 to more than $5,000. Pet care costs include, food, treats, veterinary bills, toys, grooming, and supplies such as beds, collars and leashes. Saving up for these expenses can help you enjoy your furry family member without being stressed out about paying for the things they need.
7. Brand New Car
Most people need wheels to get around, but cars aren’t just about function. Maybe you are dreaming of a low-slung sports car or an SUV that’s ready to offroad. When you get the keys to a new car, you’ll likely know that your time and energy spent saving was worth it.
8. Down Payment on a Home
Saving for a home is a top priority for many and for good reason. Home prices will typically rise 18% to 20% in the next five years, based on historical averages, meaning the value of your home will rise and likely continue to do so. Aside from the potential financial benefits, owning your dream home is a major boost to your and your family’s quality of life.
💡 Quick Tip: Want a simple way to save more each month? Grow your personal savings by opening an online savings account. SoFi offers high-interest savings accounts with no account fees. Open your savings account today!
9. Clothing and Shoes
There’s something about fresh clothes and shoes that can give you a psychological boost. For a household, costs averaged $1,434 for apparel for the year. Saving a little toward making yourself look good is one of the fun things you can save up for. It could be a whole wardrobe upgrade or a special splurge piece, but clothes can be excellent saving motivation.
10. Hobbies
If there’s something you enjoy doing in your free time, be sure to save enough money to fully invest yourself in the activity. Do you want a new acoustic guitar or perhaps a pottery wheel? Save for it. You may even be able to monetize your hobby or start a business from it.
Get up to $300 when you bank with SoFi.
Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.60% APY on your cash!
11. A Quality Mattress and Mattress Accessories
According to the Centers for Disease Control and Prevention (CDC), one out of three Americans don’t get enough sleep. Being deprived of sleep can have a major impact on how you feel and function. Which is all the more reason to save for the comfiest mattress you can find.
12. Exercise Equipment
The right exercise equipment can help you make your health a priority and work out regularly. It’s not cheap, though. Equipment can cost less than $20 for a kettlebell or thousands for a top-of-the-line rowing machine, exercise bike, or Pilates equipment.
13. Professional Lessons (Sports, Dancing, Cooking, etc.)
Whether you want to dance more smoothly or perfect your golf swing, saving toward developing those skills can bring a lot of joy and satisfaction.
14. College
So many people feel the thrill of pride and achievement when earning a college degree, and it can help fuel a career. But college is expensive. As of 2024, the average cost of college in the U.S. is more than $38,000 per student per year, according to the Education Data Initiative. Saving toward these expenses, whether for yourself or your dependents, can help them get the education they need and dampen the blow of the cost of education.
15. Quality Home Appliances
Maybe you’d like to remove that old eyesore of a dishwasher and replace it with a top-notch new one, or swap out your old washer/dryer for an eco-friendly new model. Or, say, a professional-grade stove is calling to you to live out your gourmet dreams. Once you get the appliance you were dreaming about, you’ll likely feel that saving for it was worthwhile.
16. Home Security
While it may not exactly be a cool thing to save up money for, a home security system can give you peace of mind. As a bonus, you may have fun doorbell footage to look at once you buy your system.
17. Jewelry
If you love shiny baubles, they can certainly be worth saving for. Maybe there’s a dream piece you’ve been pining for. With the cost of some custom jewelry ranging from about $500 to $10,000 or more, you’ll definitely want to have a plan to save for it.
18. Home Furniture
If you value updated and stylish furniture, you’ll want to put it on your list. New furniture can uplift the comfort, function, and look of your home. Not to mention, when (or if) you sell your home, it can possibly help your place fetch a higher sales price.
19. Events & Special Occasions (Concerts, Dinners, Sports Games, etc.)
Many of us look forward to making lifelong memories at special events, from a Taylor Swift concert to the Super Bowl to a local gala. These occasions can both entertain and help you feel connected to the people who accompany you. Indulging in tickets every now and then is an incredibly fun and cool thing to save up for.
20. Home, Car and Health Insurance
Putting money toward insurance premiums may not always be fun, but it may give you peace of mind. It helps you know that you’re covered in case of accidents, unexpected health problems, and natural disasters. Saving up to afford a policy is wise if you are, say, planning to buy a house or car or are prepping for a big live event, like marriage or becoming a parent.
21. Retirement
Saving for retirement is a critical part of your financial health. A Federal Reserve survey found that only 34% of adults felt their retirement savings were on track. If you want to give yourself a healthy cushion for some of the most vulnerable years of your life, you may want to add to your retirement savings. While it doesn’t give you a tangible payoff now, you may rest easier knowing you’re prepared for tomorrow.
22. Anniversaries
Have someone (or something) special you want to celebrate? Put aside some money to do it up right, especially if it’s a nice round number that’s coming up. It’s up to you whether the funds go towards a gift, a trip, or a special night out with friends and family.
23. Repairs and Remodels
Home improvements can make your home more comfortable and functional but they are likely a major expense. With the average remodel topping $41,600 in 2024, it will take quite a chunk of change to make it happen. Saving for this type of cost can help you turn your place into the showplace you know it can be.
24. Birthdays
Celebrating birthdays is a fantastic way to nurture the relationships in your life. Maybe it’s with a candlelit dinner or tickets to a show, but it can be a great excuse to save and then spend some cash.
25. Holidays
Creating holiday memories is important for many of us. Saving up for the holidays and seeing your vision for your family come to life can be incredibly rewarding. Americans spend around $866 each holiday season, according to data from the National Retail Federation; 71% of that goes toward gifts. Stashing some cash in advance can help alleviate stress during the most wonderful time of the year.
Banking With SoFi
Focusing on a wish-list item can give you the motivation and discipline to start saving. Of course, the savings goal will vary with each person. One person may want a trip to Bali, another may need a new car, and a third may be focused on getting a down payment together for a home.
Whatever the goal, opening a bank account and consistently depositing your cash into it to save for an important purchase can be a great way to help build your financial skills, improve your financial foundation, and elevate your quality of life.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.
FAQ
How can I develop the mindset to save long-term?
To develop a mindset to save for the long term, be sure to start with a goal. Brainstorm some important, meaningful things to save up for. Then, automate regular transfers to your savings account. If you don’t see that money in your checking account, you likely won’t spend it.
Is saving money long-term hard?
Saving can be hard, and even a small amount stashed regularly can make a big difference in your financial wellness. The Federal Reserve Bank of St Louis reports that the personal savings rate in April 2024 was 3.6%. It may not be a huge amount, but it can be a good start.
How do I make saving money easier?
Saving money is easier when you have a plan in place. Automating money transfers to your savings account when your paycheck hits is one easy way to start saving towards a goal. You can also experiment with different budgeting methods to help “find” more money to put into your savings.
Photo credit: iStock/Borislav
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
4.60% APY SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
Our account fee policy is subject to change at any time. *Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
Victor Ciardelli beamed as his mortgage company, Chicago-based Guaranteed Rate, launched a “financial wellness” and “personal well-being” app last fall before a live audience in Times Square with wellness celebrity Deepak Chopra.
“Something we are passionate about at Guaranteed Rate is caring about people and their overall well-being,” Ciardelli said in a video of the event posted online. “We wanted to make sure that we did something to help people in their general stress and alleviate pain.”
But in the days following the launch of the app, which offers home loan applications and other financial services alongside yoga classes and nutrition advice, Ciardelli wasn’t happy. Yelling at executive leadership on company calls, he referred to his employees as “failures,” complained that the team did not show him from a particular camera angle and said “Marketing is a f−−−ing disaster,” according to two executives who were on the calls.
Despite Ciardelli’s public remarks on the importance of personal well-being, many former employees told the Tribune they experienced or witnessed persistent verbal abuse and a misogynistic environment while working at Guaranteed Rate. As part of a Tribune investigation, reporters interviewed nearly 80 former employees and reviewed court records, internal company emails, written exit interviews and text messages.
Many of the former staff members who spoke with the Tribune described Ciardelli, the company’s president, CEO and founder, as a boss who was quick to berate, swear at and demean employees.
“Every person that works directly under Mr. Ciardelli is terrified of his potential anger outbursts,” one former assistant wrote to human resources after she was let go from the company a couple of years ago, according to an email reviewed by the Tribune.
Some former employees who spoke with the Tribune said they were driven to seek mental health care because of the work environment at the company; one former worker said she contacted a suicide hotline last year.
Multiple women who used to work at Guaranteed Rate, meanwhile, described working in a sexualized atmosphere where some male loan officers and managers made sexually explicit remarks to female employees, hit on them in the office or at work events, and commented inappropriately on their appearance — even, in one case, encouraging a woman to use her looks to help close a loan.
In February, a woman who used to work as a loan officer at Guaranteed Rate filed a lawsuit against two high-producing loan officers at the company, alleging sexual harassment and gender discrimination. Her complaint alleges one of the male loan officers sexually harassed her at a corporate event, that the other loan officer pressured her not to report the incident to human resources, and that for the remainder of her employment the man who made the remark used “gender-based and demeaning slurs to refer to” her and other women at the company.
Other former employees said they did not bring their complaints to human resources because they thought Ciardelli or other executives and managers meddled in the department’s business and might retaliate, with at least two former employees saying they’d observed how company leaders protected certain staff members. Others said they did complain but felt the department didn’t take the information seriously.
In response to a detailed list of questions from the Tribune, Ciardelli and Guaranteed Rate vehemently denied all of these allegations, describing the company as a positive workplace environment where women in particular are supported. The firm went to remarkable lengths to dispute the allegations, including sending the results of a worker satisfaction survey it conducted and forwarding more than 80 testimonials from current and former employees. Among them were five of Ciardelli’s current or former assistants, as well as numerous male and female executives praising his leadership and support.
The company also retained an outside law firm that, even before receiving the reporters’ list of questions, threatened to sue the newspaper for defamation.
Guaranteed Rate, whose corporate headquarters is in Chicago’s North Center neighborhood, has grown tremendously since its founding in 2000 to become one of the largest mortgage lenders in the country based on loan volume, according to industry news and data provider Inside Mortgage Finance. Its name has adorned the White Sox stadium since 2016, and as recently as 2018, Guaranteed Rate was named a Chicago Tribune Top Workplace — a distinction based on surveys conducted by an outside company, with no input from editorial staff on the selection.
Jason Scott, a former top-producing loan officer and director of VA lending, which provides home loans to military veterans and active-duty service members, at Guaranteed Rate said his earlier years at the company — when lower mortgage rates fueled industry growth — were positive. But Ciardelli’s outbursts and verbal abuse of employees grew more noticeable, he said, when rising interest rates started to erode those gains, especially after the boom years of the COVID-19 pandemic.
“I think crazy success just brings out who the real people are,” said Scott, who reported to Ciardelli in his director role and now works for CrossCountry Mortgage, a competitor of Guaranteed Rate. “What did you sacrifice to get there? Did you sacrifice your soul or your core values?”
Many other former employees who spoke with the Tribune did so on the condition they would not be named in this story, saying they feared Guaranteed Rate would sue them. Guaranteed Rate has filed lawsuits against former employees to claw back signing bonuses; it also has sued competitor New American Funding and former employees who have hired former Guaranteed Rate workers, accusing them of unlawful poaching.
Ciardelli declined to be interviewed without his attorney for this story. In response to written questions provided by the Tribune, he and the company suggested the criticism of Guaranteed Rate came from disgruntled employees who could not succeed in a demanding work environment within a challenging industry, or from people who now work for a competitor and therefore would benefit from disparaging the company.
“We hold ourselves and our team members to an incredibly high standard and are not apologetic about that,” Ciardelli said in his written responses, sent through the outside law firm retained to handle communications with the Tribune. “We also recognize … that to achieve great success, one must embrace a full ownership for their actions, both successful and otherwise to achieve growth and most important optimally serve our customers. We promote a transparent culture that supports all our team members toward that goal and welcome constructive criticism. As a result, we are not for everyone.”
Ciardelli specifically denied berating staff, yelling at executives after the app launch or ever calling employees “stupid” or “failures.” He quoted the company’s chief operating officer, Nik Athanasiou, as saying: “I have worked with Victor for 15 years. No one is in more meetings with him than me. I do not ever recall an instance where Victor was abusive toward another employee.”
Ciardelli also pointed to the company’s anti-discrimination and anti-harassment policies and said neither he nor any other executive interfered with human resources.
In response to questions from the Tribune about women’s complaints, including being subjected to sexually explicit comments and working in a “boys club” atmosphere, Ciardelli wrote that such allegations are “simply not true.” The company “has not, does not, and would not objectify women or put them in uncomfortable personal or professional situations,” he wrote.
Ciardelli also highlighted the large number of female loan officers working at the company, their professional success and the testimonials from female employees. When the Tribune asked to speak with four of those women, only one — Rola Gurrieri, the company’s New Jersey-based chief fulfillment officer — agreed to be interviewed without outside counsel or management present.
Regarding the lawsuit filed by former Guaranteed Rate loan officer Megan McDermott, the company told the Tribune it had “found no evidence supporting Ms. McDermott’s allegations of sexual harassment or gender discrimination” after conducting a “comprehensive investigation.”
Guaranteed Rate also sent a general statement detailing the company’s business philosophy, which includes a “fierce commitment to excellence.” Employees who do not “meet our core values or our quality standards” find it challenging to maintain job satisfaction at the company, it said.
“Many of these employees walk away not feeling good about the company which is a natural emotion when faced with a reality that their standards and the company standards are not aligned,” the statement said.
But many of the former employees who spoke with the Tribune described a cutthroat work culture they said could be frightening and upsetting, with several attributing that culture to Ciardelli’s laser focus on making money and growing Guaranteed Rate.
The former assistant who emailed human resources asked not to be identified in this story, fearing it might jeopardize her current job or trigger retaliation from Ciardelli. In that email, the woman wrote that she was “constantly on edge and terrified to have an interaction with Mr. Ciardelli” and that she had “consoled each assistant on his team that endured the wrath of Mr. Ciardelli’s behavior.”
“I hope that my experience will open your eyes,” she wrote.
Flying too close to the sun
In an interview with the Tribune in 2014, Ciardelli made plain his ambition to grow the company.
“If you can’t handle it, you shouldn’t be here,” Ciardelli said. “Instead of feeling like, oh, we care about people’s feelings and all that, it’s all about results.”
In the same article, Ciardelli said he worked constructively with his employees when issues arose at work. “There’s no drama involved; there’s no yelling,” he said. “Let’s fix the issue and move on.”
But multiple former executives and employees told the Tribune Ciardelli regularly yelled at and verbally attacked executives and other employees in person and on company calls, sometimes in front of hundreds of people, with the calls following the app launch just one example.
Some former and current employees told the Tribune they tried to avoid Ciardelli because they were scared of his temper.
Scott, the former director of VA lending who worked at Guaranteed Rate from 2017 until he resigned in 2022, splitting his time between offices in Hawaii and Colorado, called Ciardelli a “bully.”
Scott told the Tribune that, during one call, Ciardelli took an executive “to the woodshed and just eviscerated him verbally,” saying things such as “I can’t believe you are this stupid.”
“(Victor) throws the grenade and then he leaves the room,” not giving people a chance to explain or talk through the issue, Scott said.
At the time of Ciardelli’s 2014 Tribune interview, Guaranteed Rate had 2,500 employees nationally, 1,050 of whom were based in Chicago, according to Tribune archives.
The company grew to employ 9,708 people nationwide at its peak in 2021, Guaranteed Rate told the Tribune in May. Part of the company’s growth stemmed from its acquisitions of other mortgage companies: Manhattan Mortgage and Superior Mortgage in 2012 and Stearns Lending in 2021.
Guaranteed Rate also partners on mortgage services with some of the largest real estate companies in the country. Including the people working in those partnerships, Guaranteed Rate had 14,264 employees at its height in 2021.
Like other mortgage companies, Guaranteed Rate has suffered a significant decline in business over the last two years, stemming from mortgage rates that have more than doubled from their record lows during the pandemic.
As mortgage rates soared in 2022 and 2023, the firm implemented thousands of layoffs, with only 3,871 workers remaining as of April, or 5,756 among all its companies, excluding contractors, as of May, according to the company.
Yet Ciardelli’s volatile behavior predated the stressful times in the housing market, according to some people who worked for Guaranteed Rate. Many people who “fly too close to the sun” — a metaphor some employees used to describe working directly with Ciardelli — eventually leave, they said.
People who work in personal and executive assistant roles for Ciardelli rarely last long in their jobs, with many leaving after less than a year, former employees said. Some referred to Ciardelli’s assistant position as a “revolving door,” and the LinkedIn profiles of multiple former assistants show short stints with the company.
More than two dozen executives and senior loan officers have left the company over the last decade, with a significant exodus occurring in the past two years. Multiple former executives and loan officers — including Scott — told the Tribune they left because of Ciardelli’s verbal outbursts and what many described as a workplace where they felt bullying and misogyny were tolerated. Most now work for competitors.
Ciardelli and other executives sometimes would disparage people who left the company, according to Scott.
“I would be like ‘Guys, did anybody ever think about reaching out to them before they left and having an exit interview with them?’” Scott said. “You are talking about a person that was a top producer here that you loved them as long as they produced, and now that they leave, they are an enemy? … They are leaving for a reason.”
In Ciardelli’s written responses to Tribune questions, he said allegations of a toxic work environment or bullying on his part are “not aligned with Guaranteed Rate or my leadership.” He said neither he nor other executives have disparaged former employees when they left the company.
In response to a question about assistant turnover, Ciardelli wrote that he has worked closely with five “primary” assistants since 2000. “As is the case with any demanding support roles, there has been some turnover with secondary and tertiary assistants, but nothing that is abnormal or unexpected,” he wrote.
One testimonial sent to the Tribune was from Melissa Czaszwicz, who said she worked for Ciardelli as an executive assistant in the early 2000s. She wrote that she had a positive experience working closely with Ciardelli, who she said was especially supportive when she had children.
“Never did I witness anything inappropriate or out of line,” said Czaszwicz, who still works at Guaranteed Rate.
‘Mental health has suffered’
Some former employees who spoke with the Tribune said they were driven to seek mental health support during and after their time at the company because of the negative work environment they experienced at Guaranteed Rate.
Most of those who shared their experiences worked for an executive who has a close working relationship with Ciardelli. Former workers said this executive also verbally abused staff and was prone to volatile mood swings.
One told the Tribune she texted and called a suicide hotline last year while working at the company because of verbal abuse from the executive; she shared the texts she sent with the Tribune.
In her resignation email, sent to the executive and to the human resources department last year, she wrote: “My mental health has rapidly declined due to the way I have been treated and spoken to in the last couple of months.”
Another employee from the same team wrote in a 2019 resignation letter sent to the executive, human resources, Ciardelli and others that his “mental health has suffered.”
In the resignation email and in an interview with the Tribune, the former employee said his boss gave him the runaround when he asked for time off to attend his mother’s chemotherapy appointments and complained to other employees about his requests.
Other employees discouraged him from requesting leave directly from human resources, warning him he would be fired if he went around the executive, according to the email.
Alyssa Ortiz, another former employee, said working with this executive was like being in an “abusive” relationship, being yelled at one minute and being invited for drinks the next.
“Everyone has gotten … chewed out and left crying,” said Ortiz, who worked for Guaranteed Rate from 2017 to 2019.
Ortiz told the Tribune that human resources and Ciardelli had been notified of this executive’s verbal mistreatment of employees but did nothing. She and about a dozen other former employees told the Tribune they felt Ciardelli protected this executive because of their working relationship.
In a written exit interview from 2020, one employee from the same department described how the executive would discuss former employees’ exit interviews with current employees.
“This created a fear for us to go to HR for anything moving forward,” the employee wrote.
Ciardelli said the company was not aware of any incident in which an executive read former employees’ exit interviews aloud; he said Guaranteed Rate “would never support this practice.”
Dozens of employees have left the executive’s department since 2017, according to interviews with former workers and LinkedIn profiles. The executive has since been promoted, the executive’s LinkedIn profile and the company’s website show.
In 2018, the head of human resources at the time took away the HR representative working with the executive’s department because of “risks” the executive posed to the company, according to an email reviewed by the Tribune.
“I can’t in good conscience keep allowing (the executive) to drag other employee (sic) into … schemes,” the former HR head wrote. “And by schemes I mean risky bull−−−−.” The department would have no assigned human resources representative after that, according to the email.
In correspondence with the Tribune, Guaranteed Rate described the company as a positive workplace where abuse and harassment are not tolerated and where complaints to human resources are taken seriously.
“We are not perfect by any means, but we do work hard to listen to our employees and make sure they feel supported,” a company spokesperson wrote in an email to the Tribune in April. “Most of all, we have no tolerance for any form of bullying, harassment or mistreatment. It is not who we are or who we want to be.”
Some of the employee testimonials provided by Guaranteed Rate expressed similar sentiments. For example, Mohamed Tawy, a branch manager and senior loan officer who has been with Guaranteed Rate for three years, wrote that the culture at the company is the best he has experienced in his 15-year career.
In an interview with the Tribune, Tawy said: “As a top producer … and I’m also a minority myself, I haven’t felt anything or seen anything that makes this company in any way negative for anybody that’s different. … I’ve seen here all that matters is that you do a good job, your production is good and that you follow the protocols and the rules, and I’ve seen people succeed with that more than any company I’ve been with.”
The Guaranteed Rate spokesperson also shared the results of an employee experience survey conducted in February. According to the company, the average rating for the culture at Guaranteed Rate was 8.49 out of 10, with nearly 75% of 3,745 employees responding. Those ratings were based on employees’ stated level of comfort providing feedback and/or concerns, how much they felt supported by the company in maintaining a healthy work-life balance and their sense of Guaranteed Rate’s commitment to promoting diversity and inclusion.
The email from the spokesperson said the company received “a countless number of positive comments and appreciation for their leaders, teams and our overall culture.”
In response to Tribune questions, Guaranteed Rate said in May that the survey was anonymous and it was analyzed by its “employee experience team.” The company did not provide the Tribune with a complete set of responses from the survey, but it volunteered that employees used the word “toxic” to make a negative comment about Guaranteed Rate in only 14 of the more than 5,000 written responses provided to three open-ended survey questions.
‘Mortified and disgusted’
Megan McDermott, a single mother of three, met her supervisor at Guaranteed Rate, Jon Lamkin, in person for the first time at a corporate event in December 2015, according to the lawsuit she filed in February.
When Lamkin heard the age of her oldest child, the suit alleges, he said: “You should have known better than to let some guy’s d−−− c−−− inside you.”
According to her lawsuit, McDermott reported the comment to Joseph Moschella, a regional manager and senior loan officer at Guaranteed Rate who was responsible for McDermott’s region while she worked at the company. Moschella, the suit alleges, “pressured” her not to make a formal complaint of sexual harassment to human resources.
McDermott told the Tribune she was “mortified and disgusted” after Lamkin made the comment.
“The irony here is that Jon should have known better than to treat an employee the way he did rather than telling me I should have known better to become a single mother at 20 years old,” McDermott said, “which is vile. … He set the tone the first day I met him of the power Joe and Jon had over my career.”
As McDermott went on to become a top-producing loan officer for Guaranteed Rate in New Jersey, her suit alleges Lamkin subjected her to abuse by “regularly screaming at her and using gender-based and demeaning slurs to refer to” her and other women at the company.
Her lawsuit alleges she was “subjected to a sexual and gender-based hostile work environment” by Guaranteed Rate, Lamkin and Moschella. Her suit also alleges McDermott did not receive the same opportunities, treatment and pay as male loan officers, which some other female loan officers told the Tribune reflected their own experiences as well.
McDermott did not lodge a complaint after Lamkin’s comment because she “believed she would be retaliated against” if she did so, the suit states. When she did report to HR around 2019 that Lamkin had engaged in “abusive behavior,” the department “failed to do anything to investigate or curtail Defendant Lamkin’s behavior,” the complaint alleges.
“Joe encouraged me not to go to HR because of the damage it would do to Jon’s career,” McDermott said. “Ultimately, all that they were worried about was Jon, his reputation and his career versus reporting inappropriate behavior.”
Guaranteed Rate told the Tribune in its May response that Lamkin’s comment was “nothing more than a single off-color joke,” that McDermott accepted an apology from Lamkin and that Moschella “encouraged” McDermott to contact human resources if she was “still upset.”
The company said it “could not find any record of Ms. McDermott making any form of complaint to the company’s human resources department in 2019, either verbally or in writing.”
McDermott told the Tribune she helped build Guaranteed Rate’s business in north Jersey from the ground up and said she loved the work until she found out she was not being treated equally as a woman.
“I believe management did not want to see me succeed, didn’t take me seriously and made decisions that negatively affected me and my children financially,” said McDermott, who now works for CrossCountry Mortgage, a competitor. “I ultimately left GR because I could no longer work in an environment where I was not valued and leadership felt that they could exploit me.”
Moschella and Lamkin are still employed at Guaranteed Rate. They did not respond to a Tribune request for comment. Guaranteed Rate told the Tribune in May that it had investigated McDermott’s allegations of sexual harassment and gender discrimination and found that “there is no evidence that Mr. Lamkin or anyone else at Guaranteed Rate ever created a hostile work environment for women.”
Guaranteed Rate also said in a statement that it complies with state and federal equal pay laws. The company said an “outside law firm” had reviewed its 2023 pay data and found it compliant with state equal pay laws.
In his written responses, Ciardelli highlighted the high percentage of female loan officers at the company in comparison to its competitors and said “our women originators thrive more than at any mortgage company in the industry.”
Employee statements provided through Guaranteed Rate’s attorneys included testimonials from dozens of women. Some noted the existence of the company’s employee resource group for women, GROW, while others cited the presence of women in leadership roles throughout the company.
“In addition to my professional growth I’ve experienced, I am equally grateful for the respect and dignity with which I have been treated as a woman in the workplace,” Jaime Kinman, a senior loan officer, said in her statement. “In an industry where gender biases still exist, I have never once felt marginalized or overlooked because of my gender.”
Gurrieri, the company’s chief fulfillment officer, said in an interview with the Tribune that she “never one time” experienced misogyny at the company.
“I got promoted when I’m six months pregnant,” she said. “That’s unheard of.”
Gurrieri, who has worked for Guaranteed Rate for more than six years, described Ciardelli’s leadership style as “extremely passionate.”
“There’s never been a day where I ever felt disrespected or not appreciated,” she said.
According to a former top executive who reported to Ciardelli for many years and a former human resources employee, a handful of loan officers at Guaranteed Rate were known sexual harassers, making women feel uncomfortable with inappropriate touching and unwanted advances in work settings.
But that behavior was rarely addressed, the former workers believed, because the men were friends with Ciardelli or were high-producing loan officers — each responsible for bringing in tens of millions of dollars in loan volume. Some of these loan officers still work at Guaranteed Rate.
Ciardelli called these allegations “simply not true” and said they were contradicted by the employee testimonials provided through the company’s attorney.
“They are also inconsistent with the recollections and experiences of multiple former HR professionals,” Ciardelli wrote.
A ‘sex-driven’ culture
In interviews with the Tribune, multiple former employees described a “boys club” atmosphere at Guaranteed Rate; Scott, the former director of VA lending, said there was “a lot of misogyny.”
Jessica Moreno, a former Chicago employee who started at Guaranteed Rate at age 23, said she was the first in her family to get a corporate job. Within a year of starting her job, she said, she was paying the mortgage on her family home.
But in her department, Moreno said she experienced a “sex-driven” culture.
“All the guys were just like, tongues on the floor,” said Moreno, who worked for the company for about four years starting in 2014. Her workplace was “like a men’s locker room, and women were in it,” she said.
Male co-workers and managers would hit on her and make comments on her appearance, calling her pretty, Moreno said. Comments made at Christmas parties or happy hours could be crasser, she said.
“You’ll get, ‘Oh, I’ve always wanted to f−−− you,’” she said.
Moreno said she once overheard a male manager describe a woman who had interviewed for a job as a “fox.” Another time, she said, a manager invited a female massage therapist to the office; Moreno remembers male co-workers commenting on the therapist’s body, too.
Soon after she’d started at Guaranteed Rate, Moreno said, she met with HR to make a complaint about a manager who swore at and belittled her. The HR representative brushed off her concerns in that meeting, she said.
“After that, I felt so discouraged to never even speak up again,” Moreno said.
Moreno ended up leaving her position before taking a job working for a Guaranteed Rate loan officer; she said she was terminated after clashing with the loan officer’s assistant.
Some female former employees of Guaranteed Rate said they understood looks to be a currency within the company.
One former Chicago employee said a manager encouraged her to text a selfie to a client after hearing the client flirt with her over the phone and say he’d be inclined to speed up the loan process if he knew what she looked like.
The employee said she sent the selfie, and the manager then pushed her to go along with the client’s harassment until the loan closed, she said.
After receiving the photo, the client responded, “As pretty as you are I can’t believe some man hasn’t run off with you just howling away,” in a text reviewed by the Tribune. Later on, after sending her forms, the client texted her: “You said I would get another pic when I sent you the forms so?”
The employee said another manager in her division would frequently flirt with her and comment on her appearance. He once texted her to “stop losing weight damn it” and another time texted her that she “broke (his) concentration,” according to texts reviewed by the Tribune.
Another former Chicago employee remembered a manager telling her, while she was pregnant with her first child, “Whatever you do, don’t get a C-section — you’ll never wear a bikini again.” The employee went out on maternity leave days later. She said she did end up needing a C-section and remembers the manager’s comment echoing in her head as she was wheeled back for surgery. Two people the woman told about the incident at the time corroborated her account in interviews with the Tribune.
Several former employees in the marketing department, including two men, told the Tribune Ciardelli made comments about workers’ ages. One employee got Botox and fillers after Ciardelli told employees they were “too old” and likened the marketing department to his “grandmother’s mortgage company,” according to former marketing department employees.
In his written responses, Ciardelli said “Guaranteed Rate is committed to fostering an environment that promotes diversity, equity, inclusion, and accessibility. We maintain a comprehensive set of employment policies aimed at providing a work environment free of unlawful harassment and discrimination, where all employees treat one another with dignity and respect.”
A spokesperson said in the April 1 email sharing the employee survey results that the company had launched “even more initiatives to ensure we have a positive work environment,” including anti-harassment training, training for the human resources team “to take proper and appropriate steps and best practices for investigating and responding to employee complaints” and reminders to employees on how to report harassment or abuse.
“Our executive team has emphasized to Human Resources that all complaints should be investigated, and any form of harassment and misconduct should be dealt with swiftly – and all managers and employees who are not acting in accordance with our values be rooted out of our organization,” the spokesperson wrote.
In the company’s May responses, it said these initiatives were launched in 2023 and were to “expand and enhance” the existing training program.
All Guaranteed Rate employees must complete “harassment and discrimination prevention training” upon being hired and on an annual basis thereafter, according to the company’s May response. The company said Guaranteed Rate has an “anti-retaliation” policy that prohibits retaliation against employees who report alleged harassment or discrimination or participate in an investigation into the conduct. The company also noted it has an ethics hotline through which employees can make anonymous complaints.
“We respect and treat all employees equally no matter their sex, color, or creed,” Ciardelli wrote.
In the last 10 years, Guaranteed Rate has not settled any lawsuits involving claims of a hostile work environment, according to the company. Guaranteed Rate’s response stated that within that time frame, the company settled six claims involving allegations of a hostile work environment, including arbitration cases as well as claims filed with the Equal Employment Opportunity Commission and state and local agencies. The majority of those claims were brought by male employees, and one was resolved in Guaranteed Rate’s favor, the company said.
Guaranteed Rate employees are asked to sign mandatory arbitration agreements when they are hired, but sexual harassment claims and claims filed with the EEOC and similar state agencies are not subject to arbitration, according to Guaranteed Rate’s May responses.
‘Positive thinking’
Publicly, Ciardelli presents himself as a champion of a positive work environment — an image the company has encouraged employees to promote.
In an email sent in February by a company executive and obtained by the Tribune, employees were encouraged to share a Forbes article featuring Ciardelli; the email provided step-by-step instructions for posting it on social media.
The story, published Feb. 7, was titled “Guaranteed Rate Founder Is All In On ‘Positive Thinking’ This 2024” and described his leadership style as “Chicken Soup for the Mortgage Industry.”
“I communicate the power of positivity and gratitude to everybody around me: employees, friends, family members, everyone,” Ciardelli was quoted as saying.
Less than 24 hours after it went live, the article disappeared from the Forbes website. The site provided no explanation, but one former Guaranteed Rate employee told the Tribune former workers had written to the author about factual inaccuracies.
On Feb. 8, a Guaranteed Rate executive sent another email encouraging employees — again with step-by-step instructions — to delete any social media posts linking to the article.
“We are working with Forbes to resolve and will let you know when it will be reinstated,” the email said. “We apologize for the inconvenience, and we will send out a new link as soon as it’s available.”
The Forbes contributor declined to comment for this story. Forbes told the Tribune the article was taken down because it did not adhere to the company’s “editorial guidelines” and did not respond to further questions.
The article has yet to be republished, but Guaranteed Rate still wants people to read it. The company shared it in a PDF on its LinkedIn page.
Inside: How to become financially independent? This is something you want to read. Don’t worry — there are steps you can take and strategies you can use!
One of the biggest struggles for most people is how to become financially independent.
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Financial independence is when a person or family has achieved a high level of financial stability and money does not control their lives.
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If you don’t make the changes to reach your financial goals, then you will be stuck on a hamster wheel.
For example, debt will hold you back. Period. Until you finally get out of debt, you are a slave to money.
Another example that happens many times is out-of-control spending. The inability to spend less money than you make.
There are many ways for people to become financially independent. You have to craft a plan to match your money to the life you desire.
One way is by living within your means, another is to start making money on the side.
Your lifestyle must match your desires and what you can truly afford.
These two steps are essential in achieving financial independence.
Ways to Become to Reach Financial Independence
Financial independence is the idea that you can achieve financial freedom and continue to work or stay home without worry. Achieving this goal starts with savings and reducing debt, as well as monitoring progress as you work toward your goals.
If you want to learn how to become financially independent in 5 years, then this is exactly what you need to do today.
Making it happen will take hard work but with positivity and willpower, you’ll get there!
1. Know Where You Stand Financially
The first step towards financial independence is to find out where you stand right now (spoiler alert: it might not be where you think it is).
If they are not at zero savings how were they able to get there?
This means you need to understand your net worth.
You determine your net worth by subtracting all of your debts from your assets.
If you have a significant amount of debt, then it is likely you will be starting with a negative net worth. That is okay! You can dig yourself out.
To become financially free, you need to reach a magic number with your liquid net worth to quit working and retire early.
2. Income is Less than Expenses
First, you need to write out your income.
Next, add up all of your monthly expenses.
Take your income minus your expenses.
If your expenses are greater than your income, you will never become financially free and will live stuck in a debt trap.
If your income is higher than your expenses, that is great news! Make sure you start saving money for your future self.
3. Budget
Budgeting is a core principle of financial wellness. Budgeting your money, using the snowball method, and saving for emergencies are all keys to becoming financially independent.
A budget is a tool used to help organize finances and plan for the future.
It can be as simple as writing down what you spend on food each week or as complex as creating a full financial picture of your life.
To create a budget, decide how much income you want to generate in one month and compare that amount to what you currently spend.
Start by listing all your income and expenses for at least the last six months. Then make a plan to tackle any problem areas.
4. Reduce Debt to become Financially Independent
Financial independence is when you have paid off all your debts and are living below your means. This gives you the freedom to do whatever you want, knowing that you don’t need anyone else’s help and are not a slave to debt.
Debtors should find ways to pay off their debt and avoid creating new debt in order to become financially independent.
Pay off your credit card balance before interest or late fees are charged
Avoid taking on any additional charges by using debit cards for purchases
Borrowers should build debt payments into the monthly budget
Debt is inescapable: Drowning and leaning on others until you pay off your debt for good.
5. Save Money
Whether you’re 26 or 66, saving is an integral part of becoming financially free.
This is how you become financially stable.
It’s never too late to start saving money or learn how to invest it in different places.
Enjoy one of these fun money saving challenges!
6. Understand Your Needs & Wants
Achieving financial independence is about creating a life with only needs and wants. It’s about getting rid of the things that make us feel inadequate or less important, like debt, credit cards, and wasting time on social media.
Needs are things like food, rent/mortgage, utilities, transportation, and clothing.
Wants are all the things that make us feel like we’re keeping up with the Joneses’ or how we spend without thinking.
Most people do not have a clue on what is a need and what is a want. Most wants fall into fun spending. A no spend challenge is great for discovering what is truly a need!
7. Spend Less Than you Make
Financial independence is the ability to create a generous, balanced life without relying on others for financial support. That cannot happen if your expenses are greater than your income.
It is about spending less than you make and saving the extra money from your budget at the end of every month.
Track your spending for a few months, then analyze it to find out where you can cut back or save more money.
Look at how can you cut expenses. This could be as simple as cutting back or drastic ways to cut expenses.
8. Create a Rainy Day Fund
Financial independence is a term used to describe a person who has enough wealth that they do not have to work for money. A rainy day fund will help you to achieve this.
A rainy day fund takes your emergency fund one big step further.
Experts agree that a rainy day fund should have at least 6 months’ worth of expenses saved up in case life goes south.
Ideally, money should be pulled from the same day you receive your paycheck, so it never even touches your hands, avoiding temptation entirely.
9. Set Goals
Financial independence is a measure of personal finance that includes three components: financial goals, financial milestones, and knowing what you want your money to be used for.
You must set smart financial goals to become financially free.
Goals may depend on age and where you are in life. You must get clear about your vision for the future.
Ask yourself questions like:
How much should you have in your bank account?
What lifestyle do you want to enjoy? When is it achieved?
What your net worth should be.
Figure out what you need to do to reach your money goals.
10. Lifelong Learner
No matter how much you know, there is always room for more knowledge
Money, investments, and new technologies allow the possibility to grow your money exponentially. With a rich understanding of fiscal responsibility and a desire to progress, there are many ways to find financial liberation.
That happens by investing in learning about money, finances, and investing. Here are the best finance books I recommend.
Fastest Way to Become Financially Independent
It’s never too late to start investing in your financial independence. If you wait until the last minute, it will be difficult for you to make significant progress on your plan and stay on track with what needs to happen first.
You need to find ways to diversify your income and make more money.
That is the key for those who reach financial independence in 5 years or less.
Diversifying your income will help balance out how much money you make. You know the saying, “Don’t put all of your eggs in one basket;” the same holds true for your income.
This could be starting a side hustle that turns into a small business. Or freelancing your services. Even more important, learning how to make passive income in the stock market.
Stick around Money Bliss… We have lots of ways for you to make more money.
The Secret to Becoming Financially Independent
The secret to becoming financially independent is to take on one small financial challenge that will open up your eyes and help you understand the world of investing.
Investing is when you put money into stocks, bonds, or other low-risk investments that generate income without any work on your part. It’s called “passive” income because it happens without your involvement.
Investing in the stock market is one of the most common ways to invest, but there are other choices you might want to consider too. You can invest in bonds or look at real estate.
This is the secret of those who already have become financially independent.
How to Become Financially Independent from Parents
More than half of millennials over 21 are receiving financial help from a parent or guardian. However, many young people are beginning to realize that they can become financially independent from their parents by developing their own skills and connections in the workforce.
– Achieving personal independence is not always easy but does come with some benefits.
– It gives you more control over your life and allows you to pursue passions without feeling weighed down by debt or other obligations.
But, parents should also work on changes to help their children. For example, they can focus on showing proper money management skills and talking through financial decisions.
That way when high schoolers or young adults are ready to make their own financial decisions they have a strong foundation of knowledge of money.
How can young adults become financially independent?
Young adults are often advised to focus on building wealth in order to become financially independent.
Young adults must learn how to track expenses and make a budget.
Saving money needs to be a priority for them, so sharing housing with friends will lower expenses.
Young adults should also take into consideration their future income potential and consider whether or not they plan on continuing higher education after graduation.
What parents can do to encourage financial independence
Parents should encourage their children to become financially independent as it will benefit them in the future.
If parents always step in and solve problems, they may be preventing their kids from learning important skills that would allow them to meet their needs while putting off wants for the future.
This will only lengthen the amount of time needed to reach financial independence and this will eventually prevent an individual from reaching FI.
As parents, even if you have not been wise with money, teach those valuable lessons to your kids. Then, they can learn from your mistakes and change the trajectory of their lives.
Start Working toward your Financial Independence Today
Millions of Americans are financially dependent on someone else.
There is a lot to be said about financial independence and the perks that come along with it.
Do you want to avoid having a life of financial worry and debt?
There are numerous ways to become financially independent. Above, we have shared how to FI, ways to make financial independence happen faster, and the secrets to success.
Just to recap…
Budgeting can help you make sure you have enough income to achieve your financial goals.
Start by looking at areas of life that would be easiest for you to change, like your spending habits. The more you change how you spend, the easier it will be for that money to go farther and last longer.
If saving is another area that’s difficult for you, you might want to think about how much your spending is and then try to save that amount each week. Setting aside a specific chunk of money will make saving more manageable and help you meet the goal quicker.
Creating a generous lifestyle that includes leisure time and spending money on experiences over material things
Using the power of compounding interest
Living within your means.
Build wealth through investing in stocks, bonds, mutual funds, and other forms of investments.
In the long run, these principles will help you focus on what matters most to you so that your life is more meaningful and rewarding in general.
Now, learn how to become a millionaire with no money.
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