Chase just sweetened the pot for the Ink Business Unlimited® Credit Card. Starting Sept. 5, new cardholders can earn a $900 sign-up bonus when they spend at least $6,000 in the first three months. That’s $150 more than the previous bonus, but with the same spending requirement.
You won’t find a better, or more attainable, bonus from a cash-back business card — especially one with no annual fee.
Chase
Ink Business Unlimited® Credit Card
NerdWallet Rating
Bonus Amount
$900
How you’ll get your bonus
While the Ink Business Unlimited is a cash-back card, rewards are delivered as Chase Ultimate Rewards® points. You can redeem your points as cash via a statement credit or deposit it into a checking or savings account.
Ultimate Rewards points can also be redeemed for travel, gift cards, shopping or dining. The value of your points will depend on how you use them.
Cash back: 100 points = $1.
Chase Travel: 100 points = $1.
Pay with Points (Amazon.com and PayPal): 100 points = $0.80.
Shop Apple (via Chase): 100 points = $1.
Gift cards: Redemption value varies.
You can also transfer Chase Ultimate Rewards® points — to another Chase card or an external travel partner — to squeeze even more value out of each point.
Transfer your new Ink Business Unlimited welcome bonus to your Chase Sapphire Preferred® Card, for example, and that $900 bonus becomes a $1,125 bonus when redeemed via Chase Travel.
Should you get the Ink Business Unlimited?
The Ink Business Unlimited® Credit Card is hands down one of the best business credit cards. Its combination of simplicity and value makes this uncomplicated card an excellent choice for new businesses and established companies, alike. Cardholders get unlimited 1.5% cash back, pay no interest on purchases for 12 months (then ongoing APR of 18.49%-24.49% Variable APR), and can net one of the best bonuses out there.
Few other business cards can match it. The Wells Fargo Signify Business Cash℠ Card comes close, with a 12-month intro APR period and unlimited 2% cash back. But its sign-up bonus is $400 less than the new Ink Business Unlimited offer.
If simplicity isn’t your top priority, the U.S. Bank Business Triple Cash Rewards World Elite Mastercard® is also worth a look — especially if you count gas, office supplies, cell phone service and restaurants among your top expenses. The Triple Cash earns 3% back in those categories and matches the intro APR offers from Chase and Wells Fargo. You also get a $100 annual credit for recurring software subscriptions and an excellent welcome offer: Earn $750 in cash back. Just spend $6000 on the Account Owner’s card in the first 180 days of opening your account.
The information related to the Wells Fargo Signify Business Cash℠ Card has been collected by NerdWallet and has not been reviewed or provided by the issuer or provider of this product or service.
Are you looking for the best side hustles for moms? Being a mom is a full-time job, but that doesn’t mean you can’t make extra money on the side if you need to. Balancing work and family life can be tough, but finding a side hustle that fits your schedule can make it easier. Whether…
Are you looking for the best side hustles for moms?
Being a mom is a full-time job, but that doesn’t mean you can’t make extra money on the side if you need to. Balancing work and family life can be tough, but finding a side hustle that fits your schedule can make it easier.
Whether you need to make money to pay the bills, if you’re looking to save for a vacation, or if you simply want to save more money, there are many side hustles that may fit what you’re looking for.
I am a mom and I have done many of the side jobs listed below. Some can be part-time, others full-time, so there is probably something on the list below that can work for you.
Best Side Hustles for Moms
Below are the best side hustles for moms.
1. Blogging
Blogging is a great way for moms to make money from home. It is what I personally do so that I can work from home and spend more time with my daughter.
For me, blogging lets me travel whenever I want, work on my own schedule, make good money, write about topics I enjoy, and I really love having a blogging business.
I started Making Sense of Cents in 2011, and since then, I’ve made over $5,000,000 from my blog. When I began, I had no idea it would turn out to be one of the best jobs for stay-at-home moms. Now, I am extremely grateful for this – and it all started as a side hustle!
One way to earn money with a blog (and this is my favorite way) is through affiliate marketing. This means you recommend products and get paid when someone buys through your link. It’s like earning a commission for sharing products you use and enjoy.
Another way to make money is by placing ads on your blog. As your blog gets more visitors, you can earn money from the ads.
Writing sponsored posts is another option. Companies pay you to write about their products or services (it’s a good idea to choose products that you believe in and that fit your blog’s theme).
Blogging takes time and effort, but it can be very rewarding. You get to be creative, connect with others, and make money doing something you love.
You can learn more about how to begin in my free How To Start a Blog Course here.
2. Sell printables
Selling printables on Etsy can be a great side hustle for moms. You can make extra money by creating and selling digital items like planners, calendars, and worksheets.
All you need is a computer and some design software, and you can work on it at your own pace and from the comfort of your home.
You don’t have to spend any money to start selling printables either.
This is a great way to make money from home because you only need to create one digital file for each product, and you can sell it as many times as you want. You don’t have to print or ship anything. Instead, you create the digital file, and the customer downloads it and handles the rest after buying it from you.
You can learn more at How I Make Money Selling Printables On Etsy.
Do you want to make money selling printables online? This free training will give you great ideas on what you can sell, how to get started, the costs, and how to make sales.
3. Proofreading
Proofreading is a great way to make some extra money from home. If you have an eye for detail, you can get paid to spot errors in text.
You don’t need a special degree to start proofreading. Many online companies hire beginners and this means you can get started without lots of experience. Plus, you can build up your skills and portfolio as you go.
The pay can vary. Some proofreaders earn $1,000 a month, while others make six-figure incomes. It depends on how much you work and your experience level. You can do this full-time or just as a part-time gig.
I know several proofreaders (who are moms) who started proofreading as a side hustle, and now it’s their full-time job. So, you can spend as little or as much time as you want growing this job.
You can learn more at 20 Best Online Proofreading Jobs For Beginners (Earn $40,000+ A Year).
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This free training teaches you how to start a proofreading side hustle (and how to earn $1,000+ per month!), even if you are brand new and don’t have any previous proofreading experience.
4. Bookkeeping
Bookkeeping is a great side hustle for moms. It’s flexible and can be done from home.
Bookkeepers keep track of financial records for businesses. This includes recording transactions and balancing accounts.
Before you pass this by because you think you’re not qualified, you might be surprised to know that you don’t need to be an accountant or have any experience. Becoming a virtual bookkeeper is something you can learn from home.
You can learn more at How To Find Online Bookkeeping Jobs.
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This free training will show you how to start a profitable bookkeeping side-hustle in the next 30 days—even if you have no prior experience!
5. Print-on-demand
Print-on-demand is a great side hustle for moms.
You can create your own designs and sell them on items like T-shirts, coffee mugs, and tote bags. Websites like Etsy make it easy to set up your own shop.
There’s no need to buy supplies or handle shipping. The print-on-demand company (like Printify) takes care of that for you. This means you can focus on being creative and taking care of your family.
Many moms find this side hustle to be simple and rewarding. You can work on it during nap times or after the kids go to bed. If you love designing, this can be a perfect fit for you.
You can learn more at How I Make $1,500 Monthly With My Print-On-Demand Business.
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This freebie will teach you about print-on-demand as well as give you a list of 17 hot-selling products you can sell via print on demand.
6. Run a dog treat bakery
Starting a dog treat bakery can be a fun and profitable side hustle. You can begin this business right from your kitchen so it’s perfect for moms looking to make some extra money.
This side job can be very flexible. You can choose to keep it small and earn $500 to $1,000 a month. Or, if you have more time, you can scale it up and make even more.
You can learn more at How I Earned Up to $4,000 Per Month Baking Dog Treats (With Zero Baking Experience!).
Plus, you can sign up for this free training workshop that teaches you the small business plan for starting your own pet bakery.
7. Online survey taker
If you’re a mom looking to make some extra money from home, taking online surveys could be a side hustle.
Companies pay for your opinions on their products or services, which helps them improve and stay competitive. This side hustle is flexible, allowing you to fit it around your busy schedule, whether during nap times or after the kids go to bed.
No, you will not get rich taking surveys (this is not a lucrative side hustle, but it is very flexible!), but you may be able to earn around $50 to $100 per month by answering several surveys each week.
Surveys are almost always done online, and you’ll usually be answering multiple-choice questions or typing in quick answers about your daily life, like where you last shopped. To get started, you can sign up for several survey sites.
Some popular survey sites include:
American Consumer Opinion
Survey Junkie
Swagbucks
InboxDollars
Branded Surveys
Prime Opinion
Five Surveys
PrizeRebel
IncomeFindr
User Interviews
While some surveys pay just a few cents, others can pay up to $20 or more, depending on how detailed and complex they are. This makes it a convenient way for moms to earn a little extra income in their spare time.
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Swagbucks is a site where you can earn points for surveys, shopping online, watching videos, using coupons, and more. You can use your points for gift cards and cash.
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Once you complete five surveys, you’ve earned $5, which you can cash out using the payout options offered by the site (such as PayPal cash and free Amazon gift cards).
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Prime Opinion is a survey website that helps people to earn extra money by sharing their opinions at home. It’s a simple survey site to use: you share your thoughts, and they pay you for them.
8. Virtual assistant
A virtual assistant (VA) can do many tasks from home and this is a popular side hustle idea for moms. They may manage emails, set up appointments, create social media posts, handle customer service, and more. Many small businesses need help with these jobs.
Becoming a VA doesn’t require a lot of training. You just need good organizational skills and a reliable internet connection.
A big advantage of being a VA is flexibility. You can set your own hours and work when it’s best for you, so this makes it a perfect side hustle for busy moms.
You can learn more at Best Ways To Find Virtual Assistant Jobs.
9. Social media manager
Being a social media manager is a great side hustle for moms.
Many businesses need help with their social media accounts because they don’t have the time to keep up with posting and replying to messages, or they simply don’t have the expertise.
Tasks might include creating posts, scheduling them, and interacting with followers. Social media managers might also run ads and analyze their performance.
It’s a flexible job you can do from home, making it perfect for busy moms.
10. Affiliate marketing
Affiliate marketing is a great way for moms to make extra money.
With this side hustle, you promote products or services online. When someone buys through your link, you earn a commission.
You can get started by choosing products you like and trust. This makes it easier to talk about them. People will feel your enthusiasm and trust your recommendations.
Many moms start with their own blogs. You can write about things you know and enjoy. Topics like parenting, cooking, or fashion are good choices. You can add affiliate links in your blog posts where they fit naturally.
Social media is another place to use affiliate marketing. Sharing links on Instagram, Facebook, or Pinterest can reach a lot of people.
Affiliate marketing is flexible. You can do it at your own pace and schedule, so this is perfect if you have kids and need to work around their needs.
For me, I love affiliate marketing and I think it’s one of the best ways to make money online. I especially like how I can do work up front and make money years down the line from older blog posts. So, it is kind of like a form of semi-passive income.
If you want to learn more about affiliate marketing, I recommend signing up for Affiliate Marketing Tips For Bloggers – Free eBook.
11. Online tutoring
Online tutoring is a great side hustle for moms. You can teach different subjects from your own home and this flexible job allows you to set your own hours.
If you love math, science, or another subject, there are students looking for help. You don’t need to be a certified teacher, but having a good grasp of the subject is important.
Online tutoring also pays well. Average rates can range from $10 to $30 per hour, depending on the subject and your experience.
12. Pet sitting and dog walking
If you love animals, pet sitting and dog walking could be the perfect side hustle for you.
Pet sitting is when you look after a pet while the owner is away. This could mean feeding, playing with, and sometimes even staying overnight with the pet.
Dog walking is a bit different. You take dogs for walks, making sure they get exercise and fresh air.
Both of these jobs are flexible. You can take on as many or as few clients as you want. This makes it easy to balance with other responsibilities.
My husband’s mother is a dog walker and pet sitter on Rover (the popular dog walking app), and it always seems like she loves this side hustle. She really likes dogs, so it looks like fun to me.
You can learn more at 7 Best Dog Walking Apps To Make Extra Money.
13. Sell handmade crafts
Selling handmade crafts is a fun and creative way to make money as a mom. You can use your skills to create unique items that people love.
There are many types of crafts you can sell. Items like handmade jewelry, painted mason jars, or knit blankets can be very popular. If you’re good at sewing, you can make and sell upcycled clothing or custom pieces.
Selling classes or workshops is another option. If you’re skilled at a particular craft (like knitting), teaching others can be a rewarding side hustle.
You can learn more at 16 Best Things To Sell On Etsy To Make Money.
14. Transcribing
Transcribing is a great side hustle for moms working from home. This is where you transcribe audio files into text for clients.
To start, you only need a computer and good listening skills. Some companies hire beginners, so you don’t need experience.
The pay can vary. Some jobs pay per audio minute, while others pay per audio hour. Usually, though, you can make around $10 to $20 per hour.
Platforms like Rev, Scribie, and CrowdSurfWork are good places to begin.
Transcribing can be done at any time of day, making it flexible for moms. This makes it easy to fit around your family’s schedule.
You can learn more at 18 Best Online Transcription Jobs For Beginners To Make $2,000 Monthly.
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In this free training, you will learn what transcription is, why it’s a highly in-demand skill, who hires transcriptionists, how to become a transcriptionist, and more.
15. Photography
Photography can be a great side hustle for moms, and I personally know a few photographers who have very successful photography careers and are also mothers!
This is something you can learn, such as by shadowing another photographer or by taking classes in person or online. As you get better, you can sell your services to others. Portrait photography is a popular choice, such as with taking photos of families, kids, or even pets.
Event photography is another option. Birthdays, weddings, and parties usually need a photographer.
You can also sell your photos online. Websites like Shutterstock or Etsy allow you to earn money from your images. This way, you can work from home and on your own time.
You can learn more at 18 Ways To Get Paid To Take Pictures.
16. Clean homes
Cleaning homes can be a good side hustle if you enjoy tidying up. Many people need help keeping their houses clean but don’t have the time to do it themselves.
You can set your own hours, making it easy to fit into your daily schedule. You can start by selling your cleaning services to friends and family. Once you get some experience, you can expand your client base.
You don’t need much to start. Basic cleaning supplies and a positive attitude can go a long way. You can also charge by the hour or by the job, whichever works best for you and your clients.
I know several mothers who clean homes in their free time, and they like how they can find homes to clean that fit into their schedule (so, it can be flexible!).
17. Baby equipment rental
Renting out baby equipment can be a great way for moms to make extra cash. Many mothers likely already have a bunch of different baby items at home, so they can make money with them when they are not being used.
Platforms like BabyQuip help connect you with families who need baby gear when they travel. You can rent out items such as strollers, cribs, car seats, and even toys.
You earn money based on how often your items are rented. The more popular the equipment and the busier the travel season, the more you could earn.
Some top providers make over $10,000 a month by renting out baby gear (at this level, they are definitely buying things with the sole purpose of renting them out, though, and not just renting out things they have just laying around their homes).
18. Book author
As a mom, becoming a book author can be a great side hustle. You get to share your stories or knowledge while working from home.
You can write about anything that interests you. Whether it’s a children’s book, a novel, or a guide on something you know a lot about, there’s a place for your work. You could even write romance novels!
Income from book sales can vary. New authors might see $0 to $500 a month, while experienced authors can make between $1,000 and $10,000 per month.
Writing a book does take time and effort. You might need to write during nap times, after the kids go to bed, or when they are in school.
19. Real estate agent
Becoming a real estate agent can be a great side gig for moms. You get to help people buy, sell, or rent properties. You can set your own hours, which is perfect for balancing work and family time. Plus, the more properties you sell, the more money you can make.
You can start part-time and grow your business as you gain experience. Real estate agents usually earn commissions, so your income can vary. It’s possible to earn a lot if you work hard and build good relationships with your clients.
20. Travel agent
Being a travel agent from home is a great side hustle for moms. You help people plan their trips, find the best deals, and book their vacations.
It’s ideal for moms who love to travel and know how to find great deals. If you have experience planning trips, this can be a rewarding way to earn money.
21. Freelance writing
Freelance writing is a great side hustle for moms, and I think it’s one of the most realistic jobs for stay-at-home moms. It lets you work from home on your own schedule, so if you love to write, this could be a perfect fit.
You can write many things like blog posts, articles, or website content. The pay can start from around $50 per article but can go up to over $1,000. As you gain more experience, you might earn even more.
One big advantage of becoming a freelance writer is the flexibility. You can work when your kids are napping or busy with activities. This makes freelance writing great for busy moms.
You don’t need a lot to start either, which is nice. A computer and internet connection are enough.
I have been a freelance writer for years, and I think it’s a great way to make money as a mom.
You can learn more at 14 Places To Find Freelance Writing Jobs – (Start With No Experience!).
Time Management Tips for Moms
As you may have noticed above, there are a lot of different side hustles for moms.
But, how can you fit them into your already busy schedule?
I get it. Being a mom is hard work, and you may feel scattered already.
Managing time can be tough for moms who have a lot to handle. Here are some simple tips to help you stay organized and use your time wisely.
Creating a schedule
I recommend that you start by creating a weekly schedule. Write down everything you need to do, like work, family time, and personal tasks. You may want to use a planner or a digital app to keep it all organized.
Then, allocate specific times for your side hustle. It could be during your child’s nap time or after they’ve gone to bed. Consistency helps in sticking to your plan.
Don’t forget to schedule some “me time.” Whether it’s reading a book or going for a walk, taking breaks can help you recharge.
Review your schedule at the end of each week. Adjust what didn’t work and keep improving. This way, you’ll find a rhythm that suits you best.
Balancing work and family
Balancing work and family is important. I recommend that you set clear boundaries between work time and family time. Let your family know when you’ll be working on your side hustle so they can respect that time.
You may want to find activities for your children that don’t need constant supervision. This can give you pockets of time to focus on your tasks.
Another way is to prioritize tasks based on importance. Use to-do lists to keep track of what needs to get done. Tasks with tight deadlines should come first. For me, I have a constant to-do list on my phone, and I find that helps me remember everything as well as prioritize everything that I have going on.
To balance work and family, you will want to remember to have family activities. Movie nights or game days can strengthen family bonds and make up for the time you are working. Quality time with family is just as important as work.
Time management is about finding balance and being flexible. What works for one mom might not work for another, so keep adjusting until you find what works best for you.
Frequently Asked Questions
Below are answers to common questions about side hustles for moms.
How can moms make money on the side?
There are many ways for moms to make money on the side, such as starting a blog, selling handmade crafts, selling printables on Etsy, proofreading, bookkeeping, freelance writing, tutoring, dog walking, photography, and more.
What are some flexible ways for moms to earn money at home?
There are many ways for moms to earn money from home. They could start a bookkeeping business, sell online courses, start a blog, transcribe, or even work with print-on-demand services to sell custom-designed items.
Can you list creative side jobs for stay-at-home moms?
Some creative side jobs for moms include blogging, making and selling printables, baking (and selling) dog treats, graphic design, voice-over work, and starting a YouTube channel.
How do working moms find time for side jobs?
Working moms can find time for side jobs by finding small pockets of time during the day, like when the kids are napping or after they go to bed. Using a planner can help organize your time and set achievable goals to keep on track.
What’s the easiest side hustle for moms with no previous experience?
Taking online surveys or becoming a virtual assistant are great options for moms with no prior experience. These jobs are easy to start and require little to no training.
How can a stay-at-home mom make $2,000 a month?
To make $2,000 a month, a mom could sell multiple services like bookkeeping, proofreading, or selling a range of products such as printables and crafts. Combining several side hustles can help you reach this goal. Or, you could focus on a single side job and spend more time on it.
How can a SAHM be financially independent?
A mom can definitely become financially independent. This is possible by diversifying their income streams. They can sell products online, sell freelance services (like writing or bookkeeping), or even invest some time into building a successful blog or YouTube channel.
How To Find Side Hustles for Moms – Summary
I hope you enjoyed this article on the best side hustles for moms.
Finding the right side hustle can make a big difference for moms who want to earn extra money while still focusing on their families.
Many of the side hustles for moms above have a lot of flexibility, the chance to work from home, and the opportunity to do what you love.
Whether you start a blog, sell handmade crafts, or become a virtual assistant, there’s a side hustle that can fit into your busy life.
What do you think are the best side hustles for moms?
Setting up your first credit card is a major money milestone: You’re embarking on the freedom to purchase goods and services pretty much whenever, wherever you like. You’re also starting on an important credit-building journey as well.
As you move ahead in this process, you’ll need to understand the ins and outs of setting up a credit card to ensure you choose the right card for your needs and then use it responsibly. To help you navigate this, we’ll share the basics on credit cards, what you need to get one, how to apply, and then the smart way to purchase with that plastic once you’ve been approved. Let’s get going.
What is a Credit Card?
A credit card is a physical card (typically a plastic one, rectangular in shape) that allows you to use your credit card account. By physically presenting the card to a vendor or keying in its numerical information online, you can use your credit card to make purchases, donate funds, and withdraw cash up to your credit card limits. A word about credit limits: The average credit limit in the U.S. now is just over $30,000, but the amount you’ll be given will vary based on such factors as payment and account histories, how much debt you are carrying, and your income. A higher credit limit isn’t necessarily better (we’ll tell you more about why below) as it can allow you to rack up more debt than might be financially healthy for you. Also, note that if you are new to credit, your limit may start low and rise as you show you can responsibly pay it back on time.
Now, back to credit cards themselves. In effect, a credit card is a revolving form of a short-term loan. You then make payments to the credit card issuer. There are various types of credit cards (including all kinds of points to be earned and other rewards) to consider. And depending on your particular situation, there’s also the personal loan vs. credit card difference to ponder.
As you mull over your options, let’s be clear: Credit cards aren’t giving you this purchase power for free. You may pay an annual fee to own a credit card, and you are charged a typically high rate of interest on the balance you carry on your card. (The latest figures say that offers of new credit card accounts have an average interest rate of 19.6%, which is about 5% higher than the prevailing interest rate on existing accounts. Neither is cheap!) In addition, if you miss a payment’s due date, you will probably be assessed late fees as well. Paying careful attention to keeping your credit card account in good shape is an important responsibility.
The latest Fed intel shows that Americans carry a staggering $856 billion in credit card debt. How does that break down? The average citizen has $5,668 due on their account. From those numbers, you may well realize that owning a credit card is a serious undertaking and can lead to debt.
Why You Might Need a Credit Card
Let’s look on the bright side of why so many of us have and reply upon credit cards. They definitely make our lives easier. If you’d like to make purchases or pay bills online, then a credit card can be ideal. Plus, it’s a convenient way to make in-person transactions without needing to carry around cash. If cash is lost or stolen, it may be gone forever. With a credit card, though, you can report yours as lost or stolen and the issuer can cancel your old account and provide you with a new number and card.
When you’re short of cash, a credit card can help you to make necessary purchases. Let’s say your washer/dryer breaks and you’d need about six months to save up for a new one. A credit card lets you get the appliance right now (and clean your laundry) while paying over time. Or maybe you get hit with a major car repair or dental bill. A credit card gives you the power to pay upfront and then gradually whittle that balance down.
Another reason you probably need a credit card: Many lodging facilities and car rental companies, as just two examples, may ask for a credit card number to hold your reservation.
Basic Requirements to Get a Credit Card
Credit card issuers may differ somewhat in the specifics of their requirements to get a card. In general, though, the financial institutions look for good credit scores and the financial ability to make credit card payments. Before you apply for a credit card, you can get copies of your credit reports from the three major credit bureaus for free at AnnualCreditReport.com. If there are any errors, dispute the data, and provide correct information, sending it to each of the credit bureaus that list incorrect details. Credit scores use this information in their algorithm so, the better your credit reports look, the higher your scores should be. This makes you a better candidate for loans and lines of credit.
As a credit score benchmark, credit bureau Experian noted that the average FICO credit score increased to 714 in 2021, a four-point increase from the previous year—and the fourth year that FICO scores went up. What’s most important, though, is your FICO score and how well it aligns with the requirements of the credit card issuer where you’ve applied.
A credit card issuer will also use financial criteria to help ensure that you’re able to make the payments. This can include your income and employment stability. In fact, the CARD Act of 2009 requires credit card issuers to consider a consumer’s ability to make required payments — at least the monthly minimum based on the outstanding balance. Note that, although issuers must consider your income, there is not a minimum that they must require.
Other requirements include being the age of 18 with a Social Security number.
How to Apply For a Credit Card
Next up: how to open a credit card. It basically requires filling out an application and then submitting the application for approval.
You can apply for your credit card in multiple ways:
• in person at a financial institution
• by mail
• by phone
• online.
After checking your credit scores, you may want to compare offers (including interest rates and APRs). As we’ve noted, interest rates can be high, so do research; there are plenty of online tools and sites that allow you to scan various offers.
Some cards may be no-interest credit cards during a promotional period. Benefits can be obvious (not paying interest) but also check the length of the promotional period, what happens when it ends, and what fees may be involved.
Then apply for the card of choice that you believe you can qualify to receive. Many people opt to apply for a credit card online these days because it is quite quick and simple. You fill in basic information about yourself, and agree to a “hard inquiry” credit check (which may briefly lower your score when it shows up that you are applying for credit). Typically, there is no application fee involved to seek out a credit card.
How to Use a Credit Card Once You Have It
Once you’re approved and receive your card, it’s important to understand and follow the credit card rules. What’s most important: using a credit card responsibly. Strategies for doing that include the following:
• Don’t make too many impulse buys.”Too many,” of course, will depend upon your budget and how much your impulse purchases cost. But the truth is, when you are not pulling out cash to pay for an item, it may feel almost like it didn’t happen, unlike when you use cash or a debit card connected to your checking account. In this way, some people can wind up overspending.
• Use the appropriate credit card. If you have more than one card, consider which one is best to use; for example, will you earn rewards on a certain card?
• Take advantage of perks. If your card comes with a reward or cash-back program, take advantage of the benefits.
• Either sign up for automatic payments or for reminders. That way, you can make payments on time, which helps with credit scores.If you fall behind, this can lower your credit scores and make it more challenging to get good interest rates going forward.
• Check your monthly statements for errors. This is how you can catch identity theft and other credit card fraud. Let the issuer know ASAP when you spot something that’s not right — and report a lost or stolen card as soon as possible.
After you make purchases on your card, you’ll receive monthly statements, typically with a minimum payment (perhaps 1% to 3% of the balance or a fixed amount) and the outstanding balance. Credit card companies usually give you a grace period in which you can pay off the balance in full to avoid owing interest.
A common mistake new credit card holders make is thinking that the minimum payment due is the “right” amount to pay and somehow improves their credit. Wrong! The minimum payment is just what it says: the minimum to avoid certain fees. But it can be too easy to get into the habit of only paying the minimum payment, which means that you’ll be paying interest on the balance—and then interest on the interest. It can be hard to get out of credit card debt if you only pay the minimum and keep swiping or tapping that card. It is actually preferable to keep your balance low or non-existent (meaning pay the entire amount owed each month). What’s best for your credit score and financial health is often using only 10% or less of the credit limit on your card.
If your credit card allows you to take cash advances, carefully consider if you should use this option (and check to see what your cash advance limit is; it’s often less than the total credit card limit). Interest rates for cash advances are often higher than what you’d pay on purchases, and it isn’t unusual for a financial institution to charge a cash advance fee. If you take the money from an ATM or a bank, there will likely be additional fees. Plus, it’s standard that interest accrues from the date of withdrawal with no grace period. In other words, this can be a very costly way to get your hands on some cash.
The Takeaway
Getting a credit card is a major rite of passage as well as a big responsibility. As you’ve learned, it can be simple to apply and get approved for a card, but staying on top of your debt can take some attention and effort. Given how many Americans have at times unwieldy credit card debt and how high the rates are, use credit carefully, and you’ll enjoy its convenience and credit-building powers for years to come.
How about another way to savor convenience and cash-smart benefits? We’re talking about SoFi Checking and Savings. When you sign up for an account with qualifying direct deposits, you can get up to $300 when your direct deposit arrives into your account, and you can have access to your paycheck up to two days early. Plus you’ll earn 4.50% APY with no monthly, minimum balance, or overdraft fees.
Explore banking with SoFi today.
FAQ
What are the benefits of having a credit card?
You can use credit cards to make purchases in person and online, and then make payments over time (although interest will accrue if you don’t pay the balance in full each month). You can reserve hotel rooms, car rentals, and more; get cash advances; quickly and easily cancel a lost or stolen card and then get a replacement with a new account number; and use rewards, among other benefits.
What are the requirements for opening up a credit card?
Although credit card issuers can have different requirements, they typically want to see a good credit score and must check to see if an applicant appears to have the financial ability to make payments on the card. Additional requirements:The applicant must be 18 years old with a valid Social Security number.
How should you use your credit card?
There are a wide range of ways to responsibly use your credit card. In fact, one of its key benefits is its flexibility. So, as long as you follow the credit card rules and manage the balance responsibility, how you use it is really up to you.
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 4.50% 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. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.50% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
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 4.50% 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 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
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Your credit score is unlikely to drop for no reason, but it might drop for reasons you do not expect. Simply applying for a new credit card, closing out an old one, or being late with a payment can affect your score. A drop in your credit score of 80 points may be enough to reduce your credit score from “good” to “fair,” which can mean you will pay significantly more to borrow money.
Here’s a look at the reasons your credit score might drop, how to monitor your score, and what to do if your credit score drops suddenly.
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Why Did My Credit Score Drop 80 Points?
Your credit score is based on factors related to how you manage your debt. Specifically, whether you pay your bills on time, how much you owe creditors versus how much credit you have available, the length of your credit history, the types of debt you have, and how often you apply for a new loan or credit card. Bankruptcy and foreclosures are additional threats to your credit score.
Any one or a combination of these factors could cause your credit score to drop.
Should You Be Worried About Your Credit Score Dropping?
Credit score changes are fairly common and not always a cause for concern. However, an 80-point drop is worth looking into, as it could impact whether you get approved and receive favorable terms for a loan or line of credit.
For instance, if your score drops from 700 to 620, it’s no longer considered “good.” That means that you will not qualify for the best mortgage or credit card rates because a lender will consider you a riskier borrower and could charge you more for financing.
It’s important to first understand why the drop happened so you can correct any issues and begin getting your credit back on track. Monitoring your credit score can be a good place to start, as it allows you to track changes to your score and get insights into your financial health.
Reasons Your Credit Score Went Down
There are a few reasons why your credit score might go down. But bear in mind that it can take over a month for your credit score to update and reflect any changes in your credit situation.
You Applied for a New Loan or Credit Card
If you apply for a new loan or a credit card, your credit score may go down because card issuers will perform a “hard pull,” or hard credit inquiry, when they look at your credit information. According to FICO™, a hard pull typically takes five points or less off your FICO Score. However, if you apply for several credit cards within a short period of time, it could have a greater impact on your score.
Your Credit Card Balance Went Up
If you carry a balance on your credit card, you won’t just rack up interest charges — your credit score might drop, too. Thirty percent of your FICO Score is based on the amount of money you owe. A significant balance on a credit card could cause your score to fall and your credit utilization rate — or how much of your credit limit you’re using on your revolving credit accounts — to rise.
You Missed Payments
Around 35% of your FICO credit score is based on your payment history. Therefore, if you fail to make your monthly payments — or are late making a payment — your score could fall.2 Tools like a money tracker app can help you identify upcoming bills, create a budget, and more.
You Closed a Credit Card Account
When you close a credit card account, especially one you’ve had for a long time, the average age of your accounts falls. That, in turn, could cause your credit score to dip, as the length of your credit history accounts for 15% of your FICO Score.
What Can You Do If Your Credit Score Dropped by 80 Points?
If your credit score drops by 80 points, there are some steps you can take to find out why and to rebuild your credit score.
Ensure Your Payment History Is Correct
Creditors can make mistakes and report inaccurate information to the credit bureaus. Fraudsters can steal your identity and use your accounts. So it’s worthwhile to check your credit report, including your payment history, and dispute any inaccurate information.
You can check your credit report for free from each credit bureau on AnnualCreditReport.com. You can also check your credit report for free with Experian and sign up for monthly updates.
Don’t Miss Payments
A payment that’s over 30 days past due may be reported to the three major credit bureaus. If you fail to make a payment for 90 days, your creditor may refer your account to a collection agency. These records will remain on your account for seven years.
Keep Your Credit Utilization Rate Low
As you use more of your available credit, your credit utilization rate will increase. The higher your credit utilization rate, the more of a risk you are to a lender, and the more your credit score may decrease. Aim for a rate below 30%. For example, if your credit card has a credit limit of $12,000, don’t use more than $3,600, and ideally use $1,200 or less.
Hold Off on Applying for a Credit Card, Loan, or Mortgage
If you apply for a new loan or credit card, the lender will conduct a hard inquiry to check your credit score. As we mentioned, this type of check will only temporarily lower your score by a few points. But many hard inquiries over a short period can have a compounding effect on your credit score. This might occur if you apply for several credit cards at once. The impact of a hard inquiry will typically last a few months to a year.
Avoid Bankruptcy or Foreclosure
Declaring bankruptcy and experiencing foreclosure on a property both cause a significant drop in your credit score. And both stay on your credit report for a long time: seven years for Chapter 13 bankruptcy, 10 years for Chapter 7 bankruptcy, and seven years for a foreclosure.
How to Build Your Credit Score
Building your credit score comes down to sensible fiscal management over time.
Whether your credit score dropped or not, there are steps you can take to help boost your numbers. Examples include:
• Paying bills on time
• Checking your credit report regularly for errors
• Lowering your credit utilization rate
• Keep spending in check — a spending app can help
Scenarios Where Your Credit Score Might Drop
Here are some scenarios where you might be surprised to find that your credit score has dropped.
You Pay Off Credit Cards
Let’s say you have three credit cards: one with $5,000 in available credit, one with $8,000 in available credit, and one with $500 in available credit. That’s $13,250 of total available credit.
You have a total balance of $3,975 over all three cards, which gives you a credit utilization ratio of 30%.
Let’s also say you take out a debt consolidation loan to pay off all debt except for $250 on the card with a $500 limit. You then close out the two cards with no debt — taking with it $13,000 in available credit. You’ve kept open the card that has a $500 credit limit and a $250 balance.
This might seem like a good move because you’ve paid off over $3,000 in debt and eliminated two credit cards. However, you now have a 50% credit utilization rate, significantly higher than the recommended 30%. This may increase your credit score.
You Close an Old Credit Card Account That You Don’t Use
Another reason to think twice before closing credit card accounts? It could impact the length of your credit history, which accounts for 15% of your credit score. If you close old accounts, it could lower the average age of your credit history, and your score could take a dip as a result.
You Took Out New Loans to Pay Off Debt
Every time you apply for a loan or a credit card, the lender performs a hard pull. If you apply for multiple new loans or credit cards within a short stretch of time, it could temporarily lower your credit score.
Allow Some Time Before Checking Your Score
Credit scores continually fluctuate as information on your credit report gets updated. According to Equifax, your credit score can take 30 days or more to reflect payments you’ve made.
What Factors Impact Credit Scores?
As we discussed, your credit score is calculated based on the following, according to the FICO scoring model:
• 35% of your score is based on your payment history.
• 30% is based on the amount you owe creditors and your credit utilization rate. Ideally, your rate should be around 10% and not higher than 30%.
• 15% is based on the length of your credit history.
• 10% is based on the types of debt you have. A mix of installment debt (such as student loans, mortgage, car loan, personal loan) and credit card debt (or lines of credit) is preferable.
• 10% is based on new credit.
Pros and Cons of Tracking Your Credit Score
There are no drawbacks to tracking your credit score, except for the time it takes to obtain your report.
On the other hand, there are plenty of pros to monitoring your credit score. You’ll know where you stand regarding future loans and what potential lenders will see on your credit report. You’ll also be able to spot inaccurate or incomplete information that you can have removed, which can help boost your credit score.
How to Monitor Your Credit Score
Federal law allows you to view a free copy of your credit report from each of the three national credit bureaus (Experian, TransUnion, and Equifax) at AnnualCreditReport.com. Check the reports carefully, and if you find something you don’t agree with, file a dispute to try to have the information removed.
You can also enroll in a credit score monitoring service. These automated services notify you of changes to your credit report that might occur if you qualify for a new credit card or loan, or fall behind on loan payments.
The Takeaway
Your credit score might fluctuate without you realizing it. But a drop of 80 points may be worth investigating, as it could mean you pay significantly more to borrow money. You might be surprised to learn that if you apply for a new credit card, pay off the balance on a card, or close an old account, your credit score could be adversely affected.
It’s a good idea to obtain a copy of your credit report — it’s free — and check that the information given to the credit agencies is accurate. You can also help maintain a good credit score by not missing credit card and loan payments and by keeping your credit utilization ratio below 30%.
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
Why did my credit score go down 80 points?
Your credit score is based on factors related to how you manage your debt. Bankruptcy or foreclosure will have an obvious effect on your score, but if you have not paid your bills on time, your credit utilization rate is higher than 30%, or you close old credit card accounts and reduce your credit history, you may see a dip. Also, your credit score may be affected if you apply for a number of credit cards or loans in a short space of time.
Why is my credit score going down if I pay everything on time?
Your payment history accounts for only 35% of your credit score. Other factors include your credit utilization rate, the length of your credit history, and the types of debt you have.
Why has my credit score gone down when nothing has changed?
Even if nothing has changed for you fiscally, you may still see fluctuations in your credit score. There are various reasons why, such as a higher-than-normal credit utilization ratio, inaccurate information in your credit report, or identity theft.
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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
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.
Only One in Three American Millionaires Feel “Wealthy” and Nearly Half Say Their Financial Planning Needs Improvement, According to Northwestern Mutual Planning & Progress Study What’s it like to feel like a million bucks? Millionaires indicate it’s less about believing you’re rich and more about having confidence and clarity about the future. Nearly 80% of … [Read more…]
A spousal IRA gives a non-working spouse a way to build wealth for retirement, even if they don’t have earned income of their own.
Spousal IRAs can be traditional or Roth accounts. What distinguishes a spousal IRA is simply that it’s opened by an income-earning spouse in the name of a non-working or lower-earning spouse.
If you’re married and thinking about your financial plan as a couple, it’s helpful to understand spousal IRA rules and how you can use these accounts to fund your goals.
What Is a Spousal IRA?
A spousal IRA is an IRA that’s funded by one spouse on behalf of another. This is a notable exception to the rule that IRAs must be funded with earned income. In this case, the working spouse can make contributions to an IRA for the non-working spouse, even if that person doesn’t have earned income.
The couple must be married, filing jointly, in order for the working spouse to be able to fund a spousal IRA. For example, say that you’re the primary breadwinner for your family, and perhaps your spouse is a stay-at-home parent or the primary caregiver for their aging parents, and doesn’t have earned income. As long as you have taxable compensation for the year, you could open a spousal IRA and make contributions to it on your spouse’s behalf.
Saving in a spousal IRA doesn’t affect your ability to save in an IRA of your own. You can fund an IRA for yourself and an IRA for your spouse, as long as the total contributions for that year don’t exceed IRA contribution limits (more on that below), or your total earnings for the year.
Recommended: Understanding Individual Retirement Accounts (IRAs): A Beginner’s Guide
How Do Spousal IRAs Work?
Spousal IRAs work much the same as investing in other IRAs, in that they make it possible to save for retirement in a tax-advantaged way. The rules for each type of IRA, traditional and Roth, also apply to spousal IRAs.
What’s different about a spousal IRA is who makes the contributions. If you were to open an IRA for yourself, you’d fund it from your taxable income. When you open an IRA for your spouse, contributions come from you, not them.
It’s also important to note that these are not joint retirement accounts. Your spouse owns the money in their IRA, even if you made contributions to it on their behalf.
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Spousal IRA Rules
The IRS sets the rules for IRAs, which also govern spousal IRAs. These rules determine who can contribute to a spousal IRA, how much you can contribute, how long you have to make those contributions, and when you can make withdrawals.
Eligibility
Married couples who file a joint tax return are eligible to open a spousal IRA for the non-working spouse. As long as one spouse has taxable compensation and, in the case of a Roth IRA, they meet income restrictions, they can open an IRA on behalf of the other spouse.
Taxable compensation includes money earned from working, such as wages, salaries, tips, or bonuses. Generally, any amount included in your income is taxable and must be reported on your tax return unless it’s excluded by law.
That said, a traditional IRA does not have income requirements; a Roth IRA does.
Maximum Annual Contributions
One of the most common IRA questions is how much you can contribute each year. Spousal IRAs have the same contribution limits as ordinary traditional or Roth IRAs. These limits include annual contribution limits, income caps for Roth IRAs, and catch-up contributions for savers 50 or older.
For tax-year 2024, you can contribute up to $7,000 to a traditional or Roth IRA; if you’re 50 or older you can add another $1,000 (the catch-up contribution) for a total maximum of $8,000.
Remember, you can fund a spousal contribution as well as your own IRA up to the limit each year, assuming you’re eligible. That means for the 2024 tax year, a 35-year-old couple could save up to $14,000 in an individual and a spousal IRA.
A 50-year-old couple can take advantage of the catch-up provision and save up to $16,000.
Contribution Limits for Traditional and Roth IRAs
There are a couple of rules regarding contribution limits; these apply to ordinary IRAs and spousal IRAs alike.
• First, the total contributions you can make to an individual IRA and/or spousal IRA cannot exceed the total taxable compensation you report on your joint tax return for the year.
• If neither spouse is covered by a workplace retirement account, contributions to a traditional spousal IRA would be deductible. If one spouse is covered by a workplace retirement account, please go to IRS.gov for details on how to calculate the amount of your contribution that would be deductible, if any.
There is an additional restriction when it comes to Roth IRAs. Whether you can make the full contribution to a spousal Roth IRA depends on your modified adjusted gross income (MAGI).
• Married couples filing jointly can contribute the maximum amount to a spousal Roth IRA for tax year 2024 if their MAGI is less than $230,000.
• They can contribute a partial amount if their income is between $230,000 and $240,000.
• If a couple’s income is $240,000 or higher, they are not eligible to contribute to a Roth or spousal Roth IRA.
Contribution Deadlines
The annual deadline for making an IRA contribution for yourself or a spouse is the same as the federal tax filing deadline. For example, the federal tax deadline for the 2024 tax year is April 15, 2025. You’d have until then to open and fund a spousal IRA for the 2024 tax year.
Filing a tax extension does not allow you to extend the time frame for making IRA contributions.
Withdrawal Rules
Spousal IRAs follow the same withdrawal rules as other IRAs. How withdrawals are taxed depends on the type of IRA and when withdrawals are made.
Here are a few key spousal IRA withdrawal rules to know:
• Qualified withdrawals from a traditional spousal IRA are subject to ordinary income tax.
• Early withdrawals made before age 59 ½ may be subject to a 10% early withdrawal penalty, unless an exception applies (see IRS rules).
• Spouses who have a traditional IRA must begin taking required minimum distributions (RMDs) at age 72, or 73 if they turned 72 after Dec. 31, 2022. Roth IRAs are not subject to RMDs, unless it’s an inherited Roth IRA.
• Roth IRA distributions are tax-free after age 59 ½, as long as the account has been open for five years, and original Roth contributions (i.e., your principal) can always be withdrawn tax free.
• A tax penalty may apply to the earnings portion of Roth IRA withdrawals from accounts that are less than five years old.
Whether it makes more sense to open a traditional or Roth IRA for a spouse can depend on where you are taxwise now, and where you expect to be in retirement.
Deducting contributions may help reduce your taxable income, which is a good reason to consider a traditional IRA. On the other hand, you might prefer a Roth IRA if you anticipate being in a higher tax bracket when you retire, as tax-free withdrawals would be desirable in that instance.
Recommended: Inherited IRA Distribution Rules Explained
Pros and Cons of Spousal IRAs
Spousal IRAs can help married couples to get ahead with saving for retirement and planning long-term goals, but there are limitations to keep in mind.
Pros of Spousal IRAs
• Non-working spouses can save for retirement even if they don’t have income.
• Because they’re filing jointly, couples would mutually benefit from the associated tax breaks of traditional or Roth spousal IRAs.
• Spousal IRAs can add to your total retirement savings if you’re also saving in a 401(k) or similar plan at work.
• The non-working spouse can decide when to withdraw money from their IRA, since they’re the account owner.
Cons of Spousal IRAs
• Couples must file a joint return to contribute to a spousal IRA, which could be a drawback if you typically file separately.
• Deductions to a spousal IRA may be limited, depending on your income and whether you’re covered by a retirement plan at work.
• Income restrictions can limit your ability to contribute to a spousal Roth IRA.
• Should you decide to divorce, that may raise questions about who should get to keep spousal IRA assets (although the spousal IRA itself is owned by the non-working spouse).
Spousal IRAs, Traditional IRAs, Roth IRAs
Because you can open a spousal IRA that’s either a traditional or a Roth style IRA, it helps to see the terms of each. Remember, spouses have some flexibility when it comes to IRAs, because the working spouse can have their own IRA and also open a spousal IRA for their non-working spouse. To recap:
• Each spouse can open a traditional IRA
• If eligible, each spouse can open a Roth IRA
• One spouse can open a Roth IRA while the other opens a traditional IRA.
Bear in mind that the terms detailed below apply to each spouse’s IRA.
Spousal IRA
Traditional IRA
Roth IRA
Who Can Contribute
Spouses may contribute to a traditional or Roth spousal IRA, if eligible.
Roth spousal IRA eligibility is determined by filing status and income (see column at right).
Anyone with taxable compensation.
Eligibility to contribute determined by tax status and income. Married couples filing jointly must earn less than $240,000 to contribute to a Roth.
2024 Annual Contribution Limits
$7,000; $8,000 for those 50 and up (note that each spouse can have an IRA and contribute up to the annual limit)
$7,000; $8,000 for those 50 and up
$7,000; $8,000 for those 50 and up.
Tax-Deductible Contributions
Yes, for traditional spousal IRAs*
Yes*
No
Withdrawals
Withdrawal rules for both types of spousal IRAs are the same as for ordinary IRAs (see columns at right).
Qualified distributions are taxed as ordinary income.
Taxes and a penalty apply to withdrawals made before age 59 ½ , unless an exception applies, per IRS.gov.
Original contributions can be withdrawn tax free at any time (but not earnings).
Distributions of earnings are tax free at 59 ½ as long as the account has been open for 5 years.
Required Minimum Distributions
Yes, for traditional spousal IRAs. RMDs begin at age 72**
Yes, RMDs begin at age 72**
RMD rules don’t apply to Roth IRAs.
* Deduction may be limited, depending on your income and whether you or your spouse are covered by a workplace retirement plan. ** You must take withdrawals from a traditional IRA once you reach 72 (or 73, if you turn 72 in 2023 or later).
Dive deeper: Roth IRA vs. Traditional IRA: Which IRA is the right choice for you?
Creating a Spousal IRA
Opening a spousal IRA is similar to opening any other type of IRA. Here’s what the process involves:
• Find a brokerage. You’ll first need to find a brokerage that offers IRAs; most will offer spousal IRAs. When comparing brokerages, pay attention to the investment options offered and the fees you’ll pay.
• Open the account. To open a spousal IRA, you’ll need to set it up in the non-working spouse’s name. Some of the information you’ll need to provide includes the non-working spouse’s name, date of birth, and Social Security number. Be sure to check eligibility rules.
• Fund the IRA. If you normally max out your IRA early in the year, you could do the same with a spousal IRA. Or you might prefer to space out contributions with monthly, automated deposits. Be sure to contribute within eligible limits.
• Choose your investments. Once the spousal IRA is open, you’ll need to decide how to invest the money you’re contributing. You may do this with your spouse or allow them complete freedom to decide how they wish to invest.
As long as you file a joint tax return, you can open a spousal IRA and fund it. It doesn’t necessarily matter whether the money comes from your bank account, your spouse’s, or a joint account you share. If you’re setting up a spousal IRA, you can continue contributing to your own account and to your workplace retirement plan if you have one.
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Spousal IRAs can make it easier for couples to map out their financial futures even if one spouse doesn’t work. The sooner you get started with retirement saving, the more time your money has to grow through compounding returns.
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FAQ
What are the rules for a spousal IRA?
Spousal IRA rules allow a spouse with taxable compensation to make contributions to an IRA on behalf of a non-working spouse. The non-working spouse owns the spousal IRA and can decide how and when to withdraw the money. Spousal IRA withdrawals are subject to the same withdrawal rules as traditional or Roth IRAs, depending on which type of account has been established.
Is a spousal IRA a good idea?
A spousal IRA could be a good idea for married couples who want to ensure that they’re investing as much money as possible for retirement on a tax-advantaged basis. In theory, a working spouse can fund their own IRA as well as a spousal IRA, and contribute up to the maximum amount for each.
Can I contribute to my spouse’s traditional IRA if they don’t work?
Yes, that’s the idea behind the spousal IRA option. When a wife or husband doesn’t have taxable income, the other spouse can make contributions to a spousal traditional IRA or Roth IRA for them. The contributing spouse must have taxable compensation, and the amount they contribute each year can’t exceed their annual income amount or IRA contribution limits.
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Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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.
Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.
Is driving for Uber worth the money? I gave Uber a try in my suburban Maryland town and even made a video about it. Let me take you through my up-and-down experience testing Uber as a side hustle. Read to the end for the details on what I earned and how you can learn from my rookie ways.
Signing up, renting a car and getting started
Before Uber, I tried DoorDash and found the sign-up process to be a cinch. Signing up to become an Uber driver was more involved, but still easier than applying and interviewing for a traditional job. I downloaded the Uber Driver app, let it take a photo of my face and submitted my driver’s license to kick off the background check. It took two days to complete, including a criminal background check and review of my motor vehicle record.
If you plan to drive your own car, you’ll need a 12-year-old or newer four-door vehicle in good condition. In my state of Maryland, I’d need to upload proof of vehicle registration and insurance, and my car would need to pass a vehicle inspection. Vehicle requirements vary by state.
I didn’t think it would be realistic to drive my personal vehicle, a gas-guzzling full-size pickup, so I arranged to rent a midsize passenger car through Uber. Uber partners with rental companies such as Hertz and Avis to offer access to designated rideshare cars that come with insurance and basic maintenance.
Using Uber’s online vehicle marketplace to reserve a rental for the week was easy, but picking up the car a couple days later was pretty miserable.
The waiting room of the local Hertz office where Uber directed me was packed (presumably with other Uber drivers), and the staff was visibly overwhelmed. After a three-hour wait, I got my ride, a road-worn Chevrolet Trax subcompact SUV. I had reserved a bigger car, but was willing to take anything at that point. Uber advertises rental car rates as low as $260 per week.
Driving people around
With an uncool but efficient car in my possession, it was time to Uber. I did three “shifts” over the course of three days, and was active in the Uber Driver app for a total of 10 hours.
Friday evening
My first shift was on a summer Friday, starting at 6 p.m. I figured weekend vibes would make for good money. When I took an Uber to pick up my rental the day before, my driver said $100 would be a reasonable goal for a Friday evening.
In theory, I’d stay within the confines of Bel Air, my small town about 50 minutes north of Baltimore. In practice, I had just two trips that kept me close to home. One of those trips involved cramming four people into the tiny Trax for a white-knuckled ride from a brewery to a bowling alley. I made $6.20, didn’t get a tip, and came close to a panic attack during the eight-minute ride.
Trip fares increased as I ventured farther from home, but bigger fares came at the cost of time. I made $24.03 on a trip that took more than 45 minutes to complete, counting the time it took to get to the passenger. After it, I felt like I hit the jackpot with a $30.42 ride offer. I quickly hit accept in the app and drove 15 minutes to pick up the passenger.
My elation turned to exhaustion after I drove the rider south of Baltimore and found myself 40 miles from home after 9 p.m. I got home around 10 p.m. and called it a night with $69.40 in total earnings, well shy of my $100 goal. I had completed four trips in about 3½ hours.
Tuesday mid-morning
I got back to Ubering a little after 10 a.m. the following Tuesday despite the “hourly trends” information in the Uber Driver app showing weak demand in my area. I found myself getting matched with shorter trips, but had to meander through multiple neighboring towns to find each one, wasting a lot of time between rides (which is an Uber no-no). I drove for three hours and 40 minutes that day and earned just $34.97.
Wednesday morning
My shift was shorter Wednesday. This time, I followed the app’s trend data, which showed higher demand around 7 a.m. My first ride match came quickly, was close to home, and netted me $14.28.
But it took nearly an hour for the next trip offer to come, which was a $25 trip down to Baltimore. I accepted the offer, drove 20 minutes to pick up a passenger who was heading to work and made the 40 minute drive south. I spent most of that ride moving slowly through traffic-light-laden streets in complete silence. It was only my second ride of the day, but when it was over, I decided I’d had enough of this side hustle. Wednesday’s total was $39.36 after two rides and three hours active in the Uber Driver app.
My total earnings
In all, I made $143.73 over the course of three Uber “shifts” and roughly 10 hours of driving. I put 305 miles on my Uber rental and had to fill the tank once at a cost of $38.80. Total earnings (minus the cost of gas) were $104.93, or $10.49 an hour.
Given that the minimum wage in Maryland is $15 per hour, I’d say driving for Uber wasn’t worth the money for me. I don’t describe this test as a failure, though.
What I’d do differently next time
I learned a lot from the experience and will change things up if I drive for Uber again. Here’s what I would do differently next time.
I’ll start in a hotspot. Keeping close to home, as I tried to do, was a bad move. Demand was low during the day in Bel Air. As you’d expect, demand in and around Baltimore was regularly strong. It hit me after I dropped off my last passenger in the city that Wednesday. I was immediately prompted with trip offer after trip offer, which I repeatedly declined, because by that time, I had decided to end the test and return the rental car.
Next time, I’ll be more strategic, and spend time studying the earning trends in the app (which are conveniently displayed by location when you open the Uber Driver app and scroll down). I’ll drive to the higher-demand part of my region to start shifts. Simple as that.
I’ll give airport rides a try. The Uber Driver app also shows peak flight hours at nearby airports. I didn’t feel comfortable queueing up in the rideshare waiting area at BWI as an Uber newbie, but it might be worth a try next time. It’ll probably be a good way to nab a longer trip with a higher fare.
I’ll use my own car instead of a rental. I didn’t factor in the cost of my rental because I rented just for the purposes of this side hustle test, but I can’t shake the negative experience. The wait time was wild, and the car I got was subpar. I think this is a gig where it pays to have your own reliable, efficient car, and you’ll want to maintain it regularly. Prospective gig drivers might want to consider rideshare insurance, too.
I’ll need to do a better job to make Uber worth the money next time — if there is a next time.
Checking accounts are designed for everyday money management and make it easy to pay bills, either online or via debit card or check. Savings accounts, on the other hand, are set up for saving rather than spending. These accounts typically pay a higher interest rate on your balance to incentivize saving, and don’t provide the same ease of access as checking accounts.
That said, it’s possible to pay bills using your savings account. Whether or not you should, however, is another question. Here’s a look at when and how you might use your savings account to cover bills, whether it’s a one-off expense or a recurring payment.
How to Pay Bills From Your Savings Account
Since savings accounts aren’t set up for covering regular expenses, they don’t come with checks or a debit card. However, there are some other ways to pay bills with a savings account. Here are some to consider:
Withdraw Cash
If you’re able to pay a bill in cash, you can withdraw it from your savings account at an ATM using your ATM card or, if you also have a checking account at that bank, your debit card. To avoid fees, be sure you use an ATM that’s in your bank’s network. Also keep in mind that banks typically allow a maximum of $500 to $1,000 to be withdrawn at an ATM per day. You can withdraw more cash by going to a teller to make the withdrawal.
Make a Transfer
A simple way to use your savings account to pay a bill is to transfer the needed amount into your checking account, then make the payment from there. You can typically make this kind of transfer by using your banking app, logging into your account online, or visiting a local branch.
If your checking and savings accounts are at the same bank, the transfer is usually immediate. If your savings account is at a different financial institution than your checking account, it may take up to three days to post.
Recommended: How to Transfer Money From One Bank to Another
Use Bill Pay
In some cases. you may be able to set up a direct recurring payment from your savings account to a company or service provider, such as your credit card issuer or utility company. To do this, you’ll need to supply the billing company with the routing and account number for your savings account. Once the account is authorized, that company can then debit funds from your savings account.
Keep in mind, however, that some billing companies do not allow automatic debits to come from savings accounts. Plus, some financial institutions don’t permit this type of transaction.
Get a Cashier’s Check
For a large, one-time bill, you might consider using a cashier’s checks. This type of check looks and works like a typical check, except it’s written by a bank or credit union for withdrawal from the institution’s account, instead of the customer’s personal funds. Because the financial institution guarantees the check, it’s considered a highly secure form of payment.
To use a cashier’s check to pay a bill with a savings account, you’ll need to visit your bank or credit union and purchase the check using funds from your savings account. Financial institutions typically charge a fee for cashier’s checks.
Recommended: Money Order vs Cashier’s Check: What’s the Difference?
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What Else Are Savings Accounts Used For?
Savings accounts work well for storing and growing funds you don’t need immediately but plan to use some time in the next few months or years.
Since these accounts keep your money safe and accessible, they are ideal for building your emergency fund. A general rule of thumb is to keep at least three to six months’ worth of living expenses parked in a separate savings account that earns a competitive return, such as a high-yield savings account. When an emergency or unexpected expense comes up, you can then easily access those funds and immediately have the cash you need to deal with the problem.
Savings accounts also work well for short-term savings goals, such as paying for a vacation, new car, or home improvement project. For longer-term goals like retirement or a child’s college education, however, you’re likely better off investing your funds in the market, which involves risk but can provide greater returns over the long term.
Tips for Getting the Most Out of Your Savings Account
These strategies can help you maximize the benefits of a savings account.
• Select a high-yield or high-interest savings account. If your money is sitting in an account, earning as much interest on it as you can maximizes your cash.
• Set some specific savings goals. Understanding why you want to save money, whether it’s for a home, a vacation, or an emergency fund, can help you stay motivated to stick to your savings plan.
• Try to minimize withdrawals. To make sure your savings account grows, rather than shrinks, try to limit everyday spending to the money you have available in your checking account.
• Automate savings. To reach your savings goals faster, consider setting up a recurring transfer from checking to savings for a set day each month, ideally right after your paycheck clears.
Consequences of Paying Bills With Your Savings Account
In the past, the Federal Reserve has limited the number of transfers or withdrawals from a savings account to six per statement period under a rule called Regulation D. In response to the coronavirus pandemic, however, the Federal Reserve Board lifted the six-per-month limit. While some banks and credit unions have since loosened restrictions, many have chosen to continue imposing transaction limits. Exceeding the limit can result in a fee or, if it happens repeatedly, conversion or closure of your account.
Even if your bank doesn’t limit savings account transactions, using a savings account to pay bills generally isn’t as easy or convenient as using a checking account. Moreover, using your savings account for bill payments can reduce your balance, impacting your ability to earn interest and save for future goals.
Alternative Ways to Pay Your Bills
If you prefer to keep your savings account strictly for saving. Here are some other ways you can pay your bills: Check
• Direct debit from your checking account
• Online bill payment using your checking account
• Money order
• Cash (paid in person)
• Credit card
The Takeaway
While it’s possible to pay bills from your savings account, it’s generally not the most practical or cost-effective. Savings accounts are designed for saving money and earning interest, making them better suited for short-term saving goals rather than daily expenses.
That said, there may be times when you need to tap your savings to make a payment. In those instances, withdrawing cash or transferring money to a checking account are generally the most convenient ways to spend the money in your savings account.
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 4.50% APY on SoFi Checking and Savings.
FAQ
What ways can you spend using your savings account?
You can spend money from your savings account by withdrawing cash at an ATM, transferring funds to your checking account (and spending them from there), getting a cashier’s check, and, if your bank allows it, through direct online payments.
Why is it difficult to pay bills with your savings account?
Savings accounts are primarily designed for storing funds and earning interest, not for frequent transactions. As a result, many banks impose restrictions and fees to discourage the use of savings accounts for regular bill payments and everyday spending.
Can you pay direct debit from a savings account?
It depends on your bank and who you are trying to pay. In some cases, it’s possible to set up a direct debit from a savings account to a payee. However, some billing companies only permit direct debits from checking accounts, and many banks block this type of transaction.
Even if you are able to set up autopay through your savings account, you’ll also want to keep in mind that banks often limit transactions from savings accounts to six per month. Automatic debits could cause you to exceed your limit, resulting in fees and, in extreme cases, closure of your account.
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*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.
SoFi members with direct deposit activity can earn 4.50% 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. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.50% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
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 4.50% 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 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
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.
Both cashier’s checks and money orders are forms of payment that are guaranteed, but money orders tend to be for smaller amounts and to cost less.
With both of these payment forms, the payer’s funds are tapped before they’re issued, so there’s no risk of the money not clearing, which can be a considerable advantage over personal checks. Money orders have limits on the dollar amount but cost less to obtain — and don’t require a bank account. You can get a cashier’s check for a much larger amount, but you generally need to acquire it from a bank or credit union, and it’ll cost a bit more.
What Are Money Orders?
Money orders are a form of guaranteed payment that you can purchase at a bank or credit union, post office, money transfer service company, big-box retailer like Walmart, and even some convenience stores and supermarkets.
A money order offers assurance to the person you’re paying: Because you prepay for the money order, the payee knows that the funds are guaranteed. (This is not the case with a personal check, which could bounce when they go to deposit it.)
Although they are called money orders, this is a form of paper payment, much like a check drawn on your checking account.
How Do Money Orders Work?
Money orders can work well as a secure and convenient way to transfer funds. They typically only cost a few dollars at most, and they’re a great solution for someone who doesn’t have a bank account and thus no access to paper checks. You can fund a money order with cash, a debit card, or traveler’s checks. In some cases, you can also buy a money order with a credit card.
However, money orders usually have a $1,000 limit domestically (and $700 internationally).
What Are Cashier’s Checks?
Like money orders, cashier’s checks are prepaid and thus offer the payee a higher level of confidence that the payment will go through. Available from financial institutions where you bank, cashier’s checks are often available for large amounts (there may not be any upper limit) and with more security features. This can make them useful in real estate and other transactions that involve major sums of money.
Recommended: Certified Check vs. Cashier’s Check
How Do Cashier’s Checks Work?
You can usually only purchase a cashier’s check at a bank or credit union — and the financial institution may only offer them to current members. As with a money order, you pay for a cashier’s check in advance but in this case with funds from your account. The bank will hold those funds until the recipient deposits the cashier’s check.
Cashier’s checks cost more money (around $10, generally), but they offer greater security features than money orders. Cashier’s checks are ideal for large purchases; there isn’t a $1,000 limit as there usually is with money orders.
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Pros and Cons of Money Orders?
Money orders offer a number of advantages, but they also have some drawbacks to consider.
Pro: Available to Unbanked Consumers
Money orders don’t require a bank account to purchase them. For the 4.5% of American households that are unbanked, this option provides a way to send money securely.
Pro: Wide Availability
Money orders are available at many locations you may visit during daily errands. You can buy a money order at the post office, the bank, Walmart, Western Union, or sometimes even your grocery store or a nearby convenience store. And with fees of just a dollar or two, they can also be an affordable option.
Pro: Guaranteed Payment
Because you prepay for a money order, the payment is guaranteed. This offers assurance to whomever you’re paying — and is sometimes required for transactions to be completed.
Con: Purchase Limitations
Money orders are typically capped at $1,000 domestically (and even less internationally). If you need to make a larger payment, you may need to get a cashier’s check or find another payment method.
Con: Security Concerns
Both money orders and cashier’s checks offer more security than personal checks — and certainly more security than using cash to make a payment. What’s more, neither payment option displays your account information (like a personal check).
That said, money orders offer fewer security features than a cashier’s check. For example, if a money order is lost or stolen before you fill out all the required information, anyone could fill it out for themselves and take the money. (With a cashier’s check, the payee’s name is filled out when it’s purchased.)
Pros and Cons of Cashier’s Checks
Cashier’s checks also carry a number of pros and cons:
Pro: Larger Purchase Amounts
Cashier’s checks are ideal for larger transactions, like when making a down payment on a new car or paying closing costs on a house. If you need guaranteed payment for more than $1,000, a cashier’s check can be a good way to go.
Pro: More Security
Cashier’s checks are backed by a financial institution and typically have more security features than a money order. This may be worth the cost: For a few more dollars, you may have additional peace of mind.
Pro: Fast Access to Funds
When you deposit a personal check, it could take a few days for the funds to be available. But because cashier’s checks (and money orders) are prepaid, the recipient can usually get immediate access to funds.
Con: Cost
Cashier’s checks are typically around $10, making them more expensive than money orders. Personal checks are free, as long as your bank has already provided you with a free checkbook.
Con: Limited Availability
You can’t get a cashier’s check just anywhere; you likely need to get them at a financial institution where you bank. (In rare cases, you may be able to purchase one at a financial institution where you are not an account holder.)
When to Use a Money Order vs. a Cashier’s Check
While you can use a money order or a cashier’s check in many scenarios, here are times it may be better to go with a money order:
• It’s a small transaction: Money orders are generally secure and are more affordable than cashier’s checks. If the transaction is under $1,000, you can usually save money by going with a money order.
• You don’t have a bank account: If you don’t have a bank account, you probably won’t be able to get a cashier’s check. A money order may be your only option.
• You’re already at the post office: … or the grocery store … or Walmart. If you don’t want to make a special trip to the bank for a cashier’s check, you can pick up a money order at several convenient locations.
Recommended: How to Switch Banks
When to Use a Cashier’s Check vs. a Money Order
Money orders can be an affordable and useful option, but in some scenarios, you might want to use a cashier’s check instead, such as when:
• It’s a large purchase: Cashier’s checks aren’t bound by a $1,000 limit. If you’re making a big purchase and need guaranteed funds, a cashier’s check can work well.
• You want bank-backed security: If the payee is hesitant about a personal check, they might also pause before accepting a money order. To ease any concerns from the person you’re paying, you may want to give them a bank-backed cashier’s check.
Tips to Protect Yourself When Using Money Orders or Cashier’s Checks
Cashier’s checks and money orders are typically more secure than cash and personal checks, but there are things you can do to stay safer when using these payment methods, such as:
• Filling out money orders right away: If you lose a money order that doesn’t have the information filled out yet, anyone could fill it out to themselves and cash the money order. Banks typically fill out cashier’s checks before handing the paper over to you, reducing this risk.
• Using reputable vendors: Thoroughly research a vendor before buying a money order. Because only banks and credit unions sell cashier’s checks, you can be more confident in the check’s authenticity upon purchase.
• Keeping your receipts: In case any disputes arise, it’s a good idea to have your receipt. This may also enable you to stop the payment (if the recipient hasn’t yet cashed it), if needed.
Recommended: How to Overcome Bad Financial Decisions
The Takeaway
Cashier’s checks and money orders both offer a secure way to make guaranteed payments. Money orders can be better for smaller transactions and are available for purchase at more locations. Cashier’s checks, only available at banks and credit unions, offer heightened security and can be purchased for larger dollar amounts.
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 4.50% APY on SoFi Checking and Savings.
FAQ
How much does it cost to order a cashier’s check?
Cashier’s check prices can vary, but you can generally expect to pay around $10 for a single cashier’s check. This makes them slightly more expensive than money orders.
Are cashier’s checks or money orders easier to buy?
Money orders are typically easier to buy than cashier’s checks. Money orders are available at the post office, banks, Walmart, Western Union, and select supermarkets and convenience stores. They’re also more affordable, and you don’t need a bank account to purchase one.
Are cashier’s checks or money orders safer?
While both cashier’s checks and money orders offer security features that can make them safer than personal checks, cashier’s checks offer a higher level of safety than money orders since they’re backed by a financial institution (and for instance, the payee’s name is filled out at time of purchase). You can only purchase cashier’s checks at a bank or credit union.
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 4.50% 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. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.50% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
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 4.50% 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 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
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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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