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Apache is functioning normally

July 2, 2024 by Brett Tams

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.

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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.

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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.

Photo credit: iStock/Ivan Pantic

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

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

SoFi members with direct deposit activity can earn 4.60% 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.

SOBK-Q224-1939911-V1

Source: sofi.com

Apache is functioning normally

July 1, 2024 by Brett Tams

Inside: These festive money saving ideas you need to have a magical frugal Christmas! Rediscovering a Christmas with no money is still possible with a little bit of planning, fun, and creativity.

Just like throughout the year, the word frugal can have a bad connotation. When you put the two words together – Frugal Christmas, most people think of a sad holiday with no joy or excitement.

However, just like with a frugal lifestyle, being frugal means you are looking to stretch your dollar to the fullest.

A frugal Christmas means to be economical with the spending of your Christmas funds. You prudently set money aside for Christmas ahead of time, but remember your overall money goals. When it is time to buy Christmas gifts and decor, you are not wasteful with your money and make your money go further.

Everyone’s level of frugality is different.

The same holds true at Christmas. Your frugal Christmas will look different than your neighbor’s or a friend’s. There is no reason to trap yourself in a comparison mode.

Why a Frugal Christmas Traditions Matter?

If you are looking at Christmas with no money, don’t despair! There are plenty of money saving tips in this post to make sure you still enjoy a festive season.

If you want to stay on course to pay off debt or reach FI, then a frugal Christmas would be part of your innate nature to do. You just need some frugal living tips related to Christmas.

You can create a magical frugal Christmas.

More importantly, these frugal money saving ideas for Christmas will help you stick with your budgeting goals and lower your stress level.

This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.

How to Survive Christmas with No Money

Before we just into the Christmas frugal living tips, let’s discuss the big elephant in the room… what if you can’t afford Christmas gifts?

First of all, that is an unfortunate circumstance that you are in right now. I say “right now” because you have the power to dictate your future.

And it all starts with your mindset… you are focused on surviving Christmas with no money.

Not the fact that you are surrounded by your loved ones. With the chance, to enjoy time together, laugh together, create traditions, and make memories.

That is what Christmas is about.

So, before you move forward, you need to change your mindset. Your current money mindset is focused on having no money, being poor, and being broke.

If you want to change your financial future, then it all starts with your thoughts consuming your mind.

Start with writing down three positive things that happen in each of your days. Make sure one of them is related to money.

Frugal Christmas Tips & Money Saving Ideas

Okay, now, we are going to dig into specify ways to make a frugal Christmas a reality.

These are frugal traits that will improve your money management throughout the holiday season, but you can also start to carry these over to all aspects of your life.

To keep in the spirit of Christmas, let’s dig in and learn how to create a frugal Christmas that won’t leave you broke!

1. Focus on the Important Things

When you make the conscious decision to become more frugal, your center of attention is on the bigger picture.

For a frugal person, they view Christmas as part of a bigger puzzle. Their spending at Christmas needs to align with their money goals and desires.

This is the point when you must ask yourself the hard questions… Would you rather stay on track to pay off debt faster? Keep on saving money so you can take some time off next summer.

These are where you decide what is important in your life.

Just to be clear, I am not saying Christmas isn’t important because it definitely is. I am saying the Christmas that has been defined in our culture that focuses on gifts may not be the overarching focus of Christmas.

2. Plan to Spend Half of “Normal”

Did you know most people plan to spend an AVERAGE of $800-900 on Christmas?

For most folks, that will break any budget with a lot of debt hangover coming in January.

Challenge yourself to a Frugal Christmas of $400 or less.

When you create your frugal Christmas budget, plan to spend half of what you did the previous year. Don’t know how much you spent previously, then stick to the $400 or less.

If you are tempted to overspend, then set your budget at $200.

Now, you need to use Christmas budget template to plan your gifts into your budget.

3. Make Your Frugal Christmas Plan

Now, that you know how much you can spend on Christmas, you must make your budget line up with your gifts, Christmas decors, parties, etc.

This step is often overlooked and we typically fly by the seat of our pants.

However, one of the best money management tips is to plan how you will spend your money before you start spending anything!

In our free printables areas, we have worksheets and spreadsheets to help you.

Also, this is the chance, to be honest with friends and family about your desires for a frugal or no money Christmas. You have the time to plan a no gift holiday, gift exchange of unwanted items, etc.

4. Ask Around for Gifts

Oh my goodness! This is seriously my favorite money saving idea all year round.

Ask around and see what others don’t want anymore.

Another man’s trash is the next man’s treasure.

A recent example in my life… Someone posted in our NextDoor group that they were looking for fly fishing equipment. I politely responded that once the original poster got what they needed I would be interested in anything leftover since my hubby took up this hobby. A neighbor messaged me and we got a bunch of fly fishing equipment for a fraction of the price.

You can always find Christmas decorations and maybe even gifts for no money.

Don’t be afraid to post in Facebook groups or NextDoor. Search Craigslist or thrift stores. You will be AMAZED by what people are happily willing to get rid of.

5. Shop Based on Price

This is where you go into the store and look for gifts that can suit those on your list – more importantly, at your price level.

This is a great chance to pick up items on clearance or deeply discounted sale.

For instance, my son loved LEGOS (okay, what boy doesn’t go through that phase) and they can get quite expensive. Throughout the year, I would always look for LEGOS when they were on sale or being discontinued. This is one example of enjoying a frugal Christmas

6. Creative with Gift Exchanges

With gift exchanges, you don’t need to go out and buy a brand new present. This is a chance to find something in your house that will make a great gift for someone else.

Here are various types of gift exchanges that cost little or no money:

White elephant gift exchange
$5 gift exchanges
Unused item gift exchange
Cookie Exchange
Used toy, puzzle, or book exchange
Coffee mug exchange
Charity donation exchange
Craft supply gift exchange
Dollar Store Finds Gift Exchange
Fabulously fashionable clothing exchange
Dropped that hobby gift exchange

There are just a few ideas on how you can get creative with holding gift exchanges. Not everything must be expensive to be an awesome winner!

7. Buy in Bulk and Divide Up for Gifts

A frugal trait is buying things in bulk to save money. When the holidays roll around, this is where you use your DIY skills to come up with frugal Christmas gifts.

If you find a lot of people on your list to buy small gifts for, you can create nice packages of presents to give. Typically, these holiday gifts are ideal for teachers, neighbors, co-workers or other special people that you want to wish a Merry Christmas.

For example, you can buy scented candles in bulk and wrap a beautiful bow on the glass jar. That is an easy way to divide them up for multiple gifts.

Another idea is to buy Christmas treat bags and divide up assorted miniature candies to quickly put together many small presents.

These are ideal gifts because they are thoughtful, but also budget-friendly.

8. Plan At-Home Parties

One of the most expensive areas for any budget is entertainment and eating out. The same holds true at Christmas.

To combat extra costs, plan at-home parties where you can control the prices of food, drinks, and decor. And as a bonus, your friends and family may be relieved to spend less as well!

You can hold a potluck or cookie exchange for a fraction of the price of a night out or booked Christmas party.

There are plenty of ways to make it fun. You can still have cocktail hour with the festive dresses that are already in your closet. Don’t have something to wear – pretend you’re a teenager and shop your friend’s closets!

9. Stop Christmas Shopping

When you are done, you are done Christmas shopping. Block your eyes and ears from all of the last minute shopping and stocking stuffers.

One of the frugality traits is to make a plan for your money and stick to it.

Remember, marketers are good at their job of getting you to open up your wallet and spend money. Be stronger and stop shopping for the holidays.

Don’t go over your Christmas budget and your plan.

10. Track How Much You Save

Every frugal person likes to know how much they save.

Not everyone likes numbers, but it is pretty motivating to see how much you save.

With a financial freedom mindset, you know that every penny saved is a penny earned.

This is where you realize your out-of-the-box thinking to create a frugal Christmas is worth the time and effort. You can see your savings on the gifts, decor, and thinking adds up.

Bonus Tip: Eliminate the Stress

One of the traits of becoming frugal comes with learning to live with less. It doesn’t have to be full minimalism. A better term is living simply.

The more you do around Christmas (buying gifts, putting up decor, hosting parties, attending parties, participating in cookie exchanges, cleaning for guests, traveling for events, the list can go on and on) will cause stress.

Look for ways to take a step back and focus on what is most important to you.

That was the first tip mentioned in this post because it is the one that is overlooked the most often. You don’t decide what you want Christmas to look like. You let others and life decide how your month of December rolls out.

Eliminate the undue stress surrounding the Christmas season.

Frugal Christmas Ideas for Kids When You Have No Money for Gifts

Okay, we are going to spend a little more time around one area that causes us the most stress around the holidays – giving gifts.

There is extreme pressure to provide the Pinterest-perfect, movie-ready, Insta story each and every year.

Regardless of what you spend on Christmas, you will never be able to live up to the self-created expectations you put on yourself.

Just remember that statement when you have no money for gifts.

This is where you get super creative and honest with your loved ones.

Be Honest with Your Finances

The first step is to be completely honest with your financial situation at the moment. You aren’t looking for handouts. You just want a dose of empathy and maybe a hug.

Just like everyone else, you want to give your family the world and shower them with gifts.

However, the center of Christmas is coming together as a family and spending time together. You don’t need money for that.

Time for Creativity and Maybe a Little DIY Christmas

This is where you get creative and start digging to find gifts.

Unfortunately for society, we are flooded with materialistic items. (Just look at any donation center or walk around on trash day.) There are plenty of gifts floating around that would cost you no money.

Post in a No Buy Facebook group or Nextdoor and see if anyone is getting rid of what you want.

More than likely, you will find Christmas gifts for no money. Sometimes, you may have to a fraction of the retail price.

Another option is to use your DIY skills – learn to sew, knit, bake, etc. Give away some of your treasured handmade gifts.

No-Spend Christmas Activities

For frugal individuals, like me, the key enjoyment of the festive season does not rely on these costly aspects, but rather on the spirit of unity, shared experiences, and thoughtful gestures. This is where the concept of ‘No Gift Christmas‘ comes in, emphasizing value-driven festivities that foster warmth and happiness without the need to break the bank.

The good news is you can enjoy the holidays with plenty of things that don’t cost money.

Fun and Frugal Christmas Activities at Home

Enjoying a festive holiday season doesn’t have to break the bank. In fact, there are several fun and frugal Christmas activities you can do at home!

Roast marshmallows: Whether you have a fireplace or a stove, roasting marshmallows at home can be a delightful way to savor the season.
Christmas movie night: Why not curl up on the couch with some popcorn and a Christmas movie? Consider a crowd-pleaser like The Christmas Chronicles on Netflix.
Bake cookies: Get the whole family involved in baking and decorating Christmas cookies.
Make a popcorn garland: This is a festive and fun craft you can enjoy together and later use to decorate your Christmas tree.
Play Christmas Charades: Searching Google for free printable charade cards can give you a night of fun that is sure to create hilarious memories.
Hot Chocolate Night: Warm up and gather around with the sweet treat of homemade hot cocoa.
DIY Christmas Cards: Create and send handmade Christmas cards to local nursing homes or soldiers abroad. A personal touch to your season’s greetings will mean a lot to the recipients.
Christmas Light Scavenger Hunt: Turn your Christmas light viewing into an adventure! Print out a free scavenger hunt, bundle up, and enjoy a hands-on game during your neighborhood stroll. Remember, the true spirit of the holidays can be found in the joy of being together—not the amount of money spent.

Taking Advantage of Free Christmas Events in Your Town

There are usually plenty of free Christmas events in your town or city if you know where to look. Here are some festive events you can attend without spending a penny:

Visit the Christmas tree in your town square: Most towns have a community tree lighting ceremony that often includes free musical performances too.
Check out community holiday parades: Many towns host Christmas parades that are open and free to the public.
Look for free events at local libraries and community centers: Many libraries and community centers host free Christmas-themed activities for children, from story readings to crafts or even visits from Santa!
Go Caroling in your neighborhood: Gather your friends and family for a simple and heartwarming tradition of spreading Christmas cheer through carols.
Visit Church ceremonies: Attend church services or watch local choirs perform their favorite Christmas hymns.
Volunteering: Use the season of giving to volunteer at a local food bank, soup kitchen, or charity. It’s free and can be a rewarding experience.
Christmas Lights Tour: Drive around or take a leisurely evening stroll to enjoy the holiday light displays in your local neighborhoods. Remember to check your city or town’s events website for a complete schedule and details. The holiday spirit is abundant and can be found without breaking the bank.

For more ideas, check out the Christmas bucket list that has plenty of fun holiday-filled events.

Shopping Strategies for a Frugal Christmas

While we have plenty of tips for shopping smart on our website, we are going to focus on two areas when preparing Christmas for the frugal.

Tip #1 – Start Buying Christmas Stuff in January

Starting your Christmas shopping in January means you get to spread the cost over the whole year, taking advantage of these deep discounts.

It’s very budget-friendly and helps control the infamous last-minute Christmas shopping spree.

Now, it’s important to note that you should only buy items you are reasonably sure you will use the following Christmas, to avoid clutter or unneeded spending.

Expert Tip: make a list during the holidays of the items you need, so you know precisely what to look for in the January sales.

tip #2 – Using Money-Saving Apps for a Frugal Christmas

To save money while shopping for Christmas presents, consider using money-saving apps. These apps give you cash back, coupon codes, and discounts while you shop, reducing the overall cost of your purchases, and essentially making you “earn” while you spend.

Here are some trusty tools to help you achieve a frugal Christmas:

Rakuten (formerly Ebates): This cash back app provides discounts on purchases from thousands of retailers when you shop through its site or the app.
BeFrugal: This app offers coupons, promo codes, and cash back offers to save on everything you buy. Sign up here for your $10 bonus.
Ibotta: Ibotta allows you to earn cash back on everyday purchases online and in-store with a snap of your receipt.
Honey: Honey automatically searches and applies the best coupons when you shop online.
Hip2Save: This deal website and app posts about a wide range of heavily-discounted products, from toys to housewares. One of my favorites!
Bonus: Paribus: Although not exactly a cash back app, Paribus is worth mentioning as it scans your digital purchases, seeking price drops and getting you a refund if an item you’ve bought goes on sale or if it finds the same product cheaper elsewhere.

By keeping these apps at your fingertips and using them proactively, you can stretch your Christmas budget further and end the year on a high note, financially.

Ready to a Magical Frugal Christmas?

The best part of being frugal is focusing on what is most important and saving money along the way.

That is why frugal living tips are so very helpful!

As a frugal person, there are some years that we can have Christmas on very little money, and in other years, we choose to spend a little bit more. Never ever have we spent close to the average Christmas spending.

That right there my friend defines a frugal Christmas.

If you are still on the fence about a frugal Christmas and spending $400 or less, then let’s think about it like this…

For 20 years, you spend half of the average spending at Christmas time, you will save over $8000. That amount doesn’t include inflation.

So, you need to ask yourself, how much are you willing to spend on the Pinterest perfect Christmas? That spending must be able to be paid in cash in full – not charged to a credit card.

We have shared many frugal living tricks to make your Christmas magical. What else would you add to the list?

Happy frugal Christmas!

More Christmas Gift Ideas:

Did the post resonate with you?

More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!

Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.

Source: moneybliss.org

Apache is functioning normally

July 1, 2024 by Brett Tams

A depository institution is a financial institution into which consumers can deposit funds and where they will be safely held. Banks and credit unions are typical examples of these institutions.

Learning about how these institutions work and their pros and cons can build your financial literacy.

What Is a Depository Institution?

A depository institution is a place or entity — such as a bank — that allows consumers and businesses to deposit money, securities, and/or other types of assets. There, the deposit is kept safely and may earn interest.

To share a bit more detail, depository institutions are financial institutions that:

• Engage in banking activities

• Are recognized as a bank by either the bank supervisory or monetary authorities of the country it is incorporated in

• Receive substantial deposits as a part of their regular course of business

• Can accept demand deposits

In the U.S., all federally insured offices of the following are considered to be depository institutions:

• Commercial banks

• Mutual and stock savings banks

• Savings or building and loan associations

• Cooperative banks

• Credit unions

• International banking facilities of domestic depository institutions

💡 Quick Tip: Make money easy. Open a bank account online so you can manage bills, deposits, transfers — all from one convenient app.

How Do Depository Institutions Work?

A depository can receive funds from consumers and businesses via such means as:

• Cash

• Direct deposit

• Teller or ATM deposits

• Checks

• Electronic transfers

The depository institution holds these funds, and they are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per depositor, per ownership category, per insured financial institution. If the institution is a credit union, funds will be similarly protected by the National Credit Union Administration, or NCUA vs. FDIC.

Funds are accessible on demand (aka demand deposits rather than time deposits), and the depository institution is required to keep a certain amount of cash in its vault to ensure it has funds available for clients.

Customers are able to earn interest on different types of deposits. The depository institution also earns interest; it’s one of the ways financial institutions make money. It does so by lending money on deposit to their customers in the form of different types of loans. (For instance, some of the money on deposit might earn the account holder 2% interest, while the bank then uses the funds for a mortgage that charges 6.00% interest. There’s a good profit margin there for the depository institution.)

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Types of Depository Institutions

To better understand the purpose depository institutions serve, let’s look at some examples.

Credit Unions

Credit unions may offer many of the same services as banks, but they are owned by account holders, who are also sometimes called members. These institutions are not nonprofits. The profits that the credit union earns are paid to members in the form of dividends or are reinvested into the credit union. To put it another way, the depositors are partial owners of the credit union. You often need to live in a certain area or work at a certain profession to keep your money at a credit union.

Commercial Banks

Commercial banks are what many of us visualize when we hear the term “bank,” whether we are thinking of a major bank with hundreds of brick-and-mortar branches or an online-only entity. They are usually owned by private investors and are for-profit organizations.

Commercial banks tend to offer the most diverse services of all depository institutions, from personal banking to global banking services such as foreign exchange-related services, money management, and investment banking. The offerings may depend on how large the institution is and which customer segments it serves (say, consumers and different types of businesses).

Savings Institutions

Savings institutions are the banks that serve local communities and loan institutions. Local residents deposit their money in these institutions, and in return, they can access credit cards, consumer loans, mortgages, and small business loans.

It’s possible to set up a savings institution as a corporation or as a financial cooperative. The latter makes it possible for depositors to have an ownership share in the saving institution.

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Depository Institutions vs Repositories

Repositories and depositories are two different things despite the fact that their names sound almost the same. Here’s some of the key differences.

• Depositories hold cash and other assets, but repositories hold abstract things such as intellectual knowledge, files, and data.

• Depositories are usually credit unions, banks, and savings institutions, while repositories are typically libraries, data-storage facilities, and information-based websites.

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Depository Institutions vs Non-Depositories

Unlike depository institutions, non-depository institutions don’t accept demand deposits. These are some of the differences between these two types of institutions:

• Depository institutions accept deposits and store them for safekeeping. Non-depository institutions, on the other hand, provide financial services but can’t accept demand deposits for safekeeping.

• Depository institutions are FDIC- or NCUA-insured, while non-depository institutions can be SEC-insured or have another type of insurance.

• Credit unions and banks are commonly depository institutions. Non-depository institutions are often brokerage firms and insurance companies.

Pros of Depository Institutions

Depository institutions have a few benefits to note:

• Money is safe and FDIC- or NCUA-insured

• Accounts can earn interest on time deposits such as certificates of deposit (CDs) and possibly other deposits

• Helps keep the economy healthy by allowing depository institution to lend out deposits and earn interest

• Reduced risk of assets being lost or stolen

Cons of Depository Institutions

There are a few downsides to depository institutions. Consider these points:

• Limited growth potential of deposited funds compared to investments, money market accounts, and CDs

• Banks, credit unions, and savings institutions may charge fees for holding funds

• Minimum account balance may be required

Tips for Choosing a Depository Institution

When it comes time to choose a depository institution, it can help to keep the following things in mind when comparing different options.

• Type. Carefully consider if a credit union, saving institution, or commercial bank is the right fit. Some commercial banks have brick-and-mortar locations, while others offer all of their services online. Online banks usually pay higher interest rates on savings and charge fewer and/or lower fees, since they don’t have the overhead associated with operating branch locations. Credit unions also tend to offer higher interest rates and lower fees as they are not-for-profit as commercial banks are.

• Features. Look for a depository institution that offers perks and services that suit your needs. Special features may include high interest rates, early access to direct-deposit paychecks, cash back deals, fee-free ATMs, and free access to credit scores.

• Fees. Shop around to see which depository institution has the lowest and/or fewest fees, such as account maintenance fees and overdraft fees. As noted above, credit unions tend to charge lower and/or fewer fees than commercial banks, as do online banks.

• Convenience. If you like to bank locally and know your bank tellers and officers, choosing an institution that has branches in your neighborhood is a wise move. If you prefer the seamlessness of banking 24/7 by app, however, you might opt to open an online savings account.

Recommended: What Is an Online Savings Account?

The Takeaway

Commercial banks, credit unions, and savings institutions are all examples of depository institutions. Depository institutions can be places to safely store funds that can then easily be accessed. Funds will typically be insured by either the FDIC or NCUA up to their usual limits of $250,000 per depositor, per ownership category, per insured institution.

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FAQ

What is the difference between a bank and a depository?

There is no difference between a bank and a depository. A bank is a type of depository institution. Credit unions and saving institutions can also be depositories.

What are the types of depository institutions?

There are three main types of depository institutions. Commercial banks, credit unions, and savings institutions are all types of depository institutions.

Are commercial banks depositories?

Yes, commercial banks are one kind of depository institution where consumers can securely stash their money.

Photo credit: iStock/Mikhail Bogdanov