Walmart’s partnership with Capital One ended after the retail giant filed a lawsuit alleging that the McLean, Virginia-based bank failed to meet certain customer service standards.
Bloomberg
The demise of the short-lived and acrimonious credit card partnership between Walmart and Capital One Financial is raising new questions about the retail giant’s ambitions to compete with banks.
The two companies announced Friday that their relationship was coming to an end, which gives Walmart options as it seeks to get better plugged into its shoppers’ wallets. One potential avenue is to find a new bank for a run-of-the-mill credit card partnership.
The more aggressive route by Walmart would be to take on banks by becoming a one-stop financial services provider. It could do that with the help of an outside fintech firm, but analysts think it’s more likely that it will look internally through its majority-owned fintech, called One. One runs a debit card, is testing out buy now/pay later options, and, with the addition of a credit card, could be closer to becoming the financial super-app Walmart has long sought.
“It might be time for One card to rule them all,” quipped Richard Crone, head of Crone Consulting.
Walmart declined to comment on its plans. But executives at the retail giant have long been eyeing an expansion into banking services, undeterred by the company’s failed 2006 attempt to gain a bank charter.
Walmart wants to “centralize all financial solutions on one platform so it doesn’t feel like it’s 25 different things,” Julia Unger, a top Walmart’s financial services executive, said at the American Banker Payments Forum in 2022. She said the retailer’s vast shopping and payments data from its 4,600 stores and its website enables it to perform alternative underwriting on loans beyond traditional credit scores.
“The strategy isn’t to give everyone credit but give them a path to credit,” Unger said.
In 2021, Walmart partnered with the fintech investment firm Ribbit Capital to launch what’s now known as One. The joint fintech venture made two acquisitions in 2022: the early wage access firm Even Responsible Finance and One Finance, which offered savings tools, ATM access and mobile financial tools.
The One debit card offers 3% cash back at Walmart stores and a 5% rate on savings.
The retailer also separately offers buy now/pay later loans through a partnership with the fintech Affirm that dates back to 2019. But CNBC reported in April that One had started offering those services at some Walmart stores, raising the prospect that Walmart could scrap its Affirm partnership.
Affirm has declined to comment on the CNBC report. Asked about the issue on a recent Morning Brew podcast, Affirm’s chief financial officer said the company’s focus is “making sure we delight the consumer and … drive better business outcomes for our merchants.”
Alex Johnson, founder of the Fintech Takes newsletter, said Walmart’s severing of ties with Capital One may be continuing the retailer’s pattern of “using partners until they can find a way to do it directly.”
To offer a credit card, Walmart would still need to partner with a bank, much like its current debit card partnership with Coastal Community Bank in Everett, Washington. But Walmart, long known as a tough negotiator, would get the flexibility to design a “more tailored set of products that prioritizes the financial health of their customers,” Johnson said.
Big banks’ partnerships with retailers often involve a “push and pull,” Johnson said. Banks and merchants can earn more interest from customers who carry balances each month. But those customers’ higher interest payments can strain their finances — giving them less spending room to make more purchases at stores like Walmart.
Through its majority-owned fintech, Walmart can design a set of products that fits its “big and diverse customer base,” Johnson said. It could launch a higher-tier card for customers who regularly pay off their balances while directing shoppers with lower credit scores to buy now/pay later options and offering rewards-based debit cards to those who might not qualify for BNPL loans.
“In a classic co-branding model, the retailer or the merchant would have not a ton of flexibility,” Johnson said. So now some big retailers are “trying to exert a great deal more control” over their card programs, he explained.
The breakup of the Walmart-Capital One relationship followed a lawsuit in which the retailer argued that its bank partner was not fulfilling the terms of their arrangement. Walmart said last year that the McLean, Virginia-based bank “was consistently unable to meet” certain customer service standards related to payment processing, card issuance and transaction posting.
Capital One disputed Walmart’s claims, arguing that the retail giant was trying to wiggle out of a contract when it found the economic terms unpalatable. It also argued that Walmart had fallen short of its obligations to market the card to more customers.
“Walmart is positioning itself to compete directly with Capital One to provide credit and payment products to Walmart customers,” Capital One said in a court filing last year.
In March, a federal judge sided with Walmart, writing that the contract between the companies clearly dictated that the bank’s “repeated customer service failures entitled Walmart” to end the partnership.
It was not the first time that a Walmart credit card partnership went south. Capital One took over the partnership after Walmart sued its prior partner, Synchrony Financial.
Under the termination deal between Walmart and Capital One, the bank is hanging onto an $8.5 billion loan portfolio as well as servicing responsibilities.
For now, the user experience for holders of Capital One-Walmart cards will remain the same. A Capital One spokesperson said the company will “convert existing eligible Walmart Card customers” to a Capital One credit card. The bank is “actively shutting down new applications for the Walmart card” and will communicate any changes to existing customers well in advance, the spokesperson said.
Analysts who cover Capital One said that the breakup will have a small impact on the bank, since the Walmart portfolio makes up a small portion of Capital One’s total loans. If anything, the analysts were positive about the news.
Capital One will be able to “pick from the better quality customers” in the $8.5 billion portfolio, Moshe Orenbuch, an analyst at TD Securities, wrote in a research note. And rather than sharing revenues with Walmart, Capital One will get to keep all of the income from its newly converted card customers, he noted.
The fact that Walmart didn’t have another bank lined up to take over the portfolio “also speaks to the industry’s discipline” in declining to accept less-than-stellar terms, Orenbuch wrote.
If Walmart does strike out on its own, it will face the formidable challenge of managing everything that running a credit card entails — underwriting, billing, handling complaints and the vast range of rules surrounding credit card programs.
Walmart will have to close customer accounts or decline applications, perhaps risking that upset customers will end up preferring to shop at Target, said Brian Riley, a consultant and co-head of payments at Javelin Strategy & Research. And it will have to decide just how much credit risk it wants to absorb on its own balance sheet, rather than Capital One’s.
“It’s not as easy as it looks,” Riley said. “And that’s something that Walmart has to be very wary about.”
The Wall Street giant Goldman Sachs, which expanded into credit cards by partnering with General Motors and Apple, struggled in the business and has since scaled back. It’s also faced scrutiny from regulators over credit card management.
In 2021, Walmart hired two former Goldman executives who were key to its consumer push: Omer Ismail and David Stark.
Running a credit card is easier said than done, but Walmart’s sheer size helps, said Aaron Press, research director at Worldwide Payment Strategies.
“It’s hard to pull off,” Press said. “It’s a heavy lift, but they have a lot of resources.”
Renting a car with a credit card is easier than renting a car without a credit card, but both methods are possible at many major car rental agencies. Car rental companies typically put customers through more hoops to rent a car without a credit card.
In this guide, we’ll cover how to rent a car without a credit card — but also explore the potential perks of paying for a rental car with a credit card, when possible.
Is It Possible to Rent a Car Without a Credit Card?
So do you need a credit card to rent a car? Technically, no, you do not have to have a credit card to rent a car. It’s possible to rent a car with a debit card at some major rental agencies. Some agencies even accept prepaid gift cards, cash, or money orders as a form of payment at the end of the rental.
Each rental agency has its own stipulations about paying by debit card. Some franchises may not follow corporate policy, so it’s always a good idea to call the specific rental agency location to ask about payment options before arriving at your destination.
Common requirements for customers paying for a rental without a credit card include:
• Security deposit: Many agencies will put a hold on your debit card for the cost of the rental, plus an additional amount. You will not be able to use the money being held for the duration of your trip, which can make funding your vacation more challenging.
• Credit check: If you are paying with a debit card (or cash), some rental car agencies may perform a credit check. This could result in a hard inquiry on your credit report, which might temporarily lower your score.
• Identification: Renting a car without a credit card might mean that the rental agency needs to see multiple valid forms of ID.
• Age: While 25 is often the magic number to rent a car, it is possible to rent a car as a younger driver. Many agencies charge “young driver fees” to do so. However, if you are renting a car with a debit card, agencies may not allow drivers under the age of 25.
• Proof of return travel: If renting from an airport with a debit card, many agencies want to see a ticketed return travel itinerary as an extra assurance that you will return with the car.
• Logos: Some rental car agencies require debit or prepaid cards to carry the logo of a major credit card company, like Mastercard, Visa, or Discover.
The following rental car agencies allow you to rent a car without a credit card at participating franchises if you meet their specific requirements (though note this is not an exhaustive list):
• Alamo
• Avis
• Budget
• Dollar
• Enterprise
• Hertz
• National
• Sixt
• Thrifty
• Turo
Recommended: Buying a Car with a Credit Card
Why Rental Car Agencies Typically Require a Credit Card to Rent a Car
Why do you need a credit card to rent a car at some agencies, and why do others impose a number of requirements for debit card payments? Here are the reasons rental car agencies require a credit card or other information.
Proof of Reliability
Having a credit card inherently demonstrates to a rental car agency that a creditor trusts you enough to borrow their money. Because rental car agencies can ascertain your creditworthiness from a credit card in your name, they don’t need to run a credit check before loaning you a $25,000 piece of machinery.
Ability to Collect Repair Fees
If you return the car damaged, the rental car agency will need to pay for these repairs. Car insurance (whether through your own policy, credit card travel insurance, or the agency’s policy) may cover most of the charges, but you still might owe a deductible. Without proper insurance, there is a risk that the repair costs will exceed your security deposit.
Though you can rent a car without a credit card, if you pay with a debit card, the rental agency runs the risk of your checking account not having enough funds to cover the cost. There is a better chance the agency can charge your credit card without hitting your credit limit.
Ability to Collect Tickets and Fees
Similarly, if you go through any electronic toll booths or receive a ticket without being pulled over (e.g., through a traffic camera), the rental car agency can charge your credit card to pay the outstanding balance. Again, they face less risk of maxing out a credit card than overdrawing a checking account, which is why some agencies prefer customers renting a car with a credit card.
Benefits of Using a Credit Card for a Car Rental
Here are just a few potential perks of swiping your credit card for a car rental:
• It’s easier. As discussed above, renting a car without a credit card can complicate the process.
• You might have insurance. Some travel credit cards offer car insurance when you use them to pay for a rental car. Research your card’s policy carefully to understand what coverage it provides and how to use it. For example, many credit cards with travel insurance require that you decline the rental agency’s insurance; some only offer secondary insurance, meaning you need to file claims through your own auto insurance first.
• You might get discounts. Some credit cards offer special discounts at select car rental agencies. Check your card’s policy to understand where and how to get discounted rates.
• You could earn rewards. As mentioned above, you might qualify for cash back rewards when you opt to cover your rental car with a credit card payment. Other cards may pay out rewards as miles or points. Travel credit cards might even offer extra points for travel-related expenses, like rental cars.
Typical Rental Car Credit Card Interest Charges
When you rent a car, the agency typically puts a hold on your credit card for a set amount, often the value of the rental car agreement; this is commonly called a security deposit. During the rental period, these funds will count toward your credit limit.
When you return the car, the agency will charge you the amount of the rental, plus any fees incurred during the rental (damages, extra days, late drop-off, etc.). If the initial hold was more than the final cost of the rental, the agency will put that amount back on your card.
Because you pay interest on money borrowed with a credit card, it’s possible you might incur interest on the held security deposit. However, paying off a credit card in full every month is a smart strategy for avoiding interest charges given how credit cards work.
Recommended: When Are Credit Card Payments Due?
The Takeaway
Renting a car with a credit card makes the process much easier and can have benefits for the renter as well. However, it is possible to rent a car without a credit card. Just be prepared to take additional steps to get behind the wheel.
Whether you’re looking to build credit, apply for a new credit card, or save money with the cards you have, it’s important to understand the options so you can use your credit card responsibly.
SoFi Travel has teamed up with Expedia to bring even more to your one-stop finance app, helping you book reservations — for flights, hotels, car rentals, and more — all in one place. SoFi Members also have exclusive access to premium savings, with 10% or more off on select hotels. Plus, earn unlimited 3%** cash back rewards when you book with your SoFi Unlimited 2% Credit Card through SoFi Travel.
Wherever you’re going, get there with SoFi Travel.
FAQ
Do I need a credit card for rental car insurance?
You do not need a credit card to purchase rental car insurance. While using a credit card makes it easier to secure a rental, most agencies allow you to pay upon your return with a credit card, debit card, or even cash, a gift card, or a money order. That includes the cost of insurance provided by the rental agency.
However, many car insurance providers cover rental cars in their policies, especially in the United States. Check with your agent to see if you’re covered. Additionally, some credit cards offer rental car insurance when you use them to pay for the rental. Your credit card benefits administrator can explain how, if, and when coverage applies.
Is it easier to rent a car with a credit card or debit card?
Renting a car with a credit card is easier than renting a car with a debit card. Many agencies will let you rent with a debit card; they just have additional requirements for you to meet before renting.
What form of payments are accepted for renting a car?
While rental agencies generally prefer credit cards for payment, some agencies allow you to book and rent a car with a debit card. Upon return, you may be able to pay for the car with a prepaid gift card, cash, or money order.
Can I use someone else’s credit card to rent a car?
If you use someone else’s credit card to rent a car, that person must be present to pick up the rental and be the main driver. If you intend to drive the rental, you will likely have to pay a fee for an additional driver, as you can’t be listed as the primary driver when using someone else’s credit card.
Photo credit: iStock/skynesher
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Eligibility:
You must be a SoFi registered user. You must agree to SoFi’s privacy consent agreement. You must book the travel on SoFi’s Travel Portal reached directly through a link on the SoFi website or mobile application. Travel booked directly on Expedia’s website or app, or any other site operated or powered by Expedia is not eligible. You must pay using your SoFi Credit Card.
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Do you want to learn how to make $50 a day? Whether you are looking to make extra income with a side hustle or if you are looking for a full-time career, there are many ways to make $50 or more each day. There are many ways to make $50 a day, like working from…
Do you want to learn how to make $50 a day?
Whether you are looking to make extra income with a side hustle or if you are looking for a full-time career, there are many ways to make $50 or more each day.
There are many ways to make $50 a day, like working from home or selling things online. Learning how to make extra money can change your life, whether it’s for daily expenses, saving for big goals, or even early retirement. Making $50 a day can be a stepping stone or a big achievement.
Best Ways To Make $50 a Day
Below are the best ways to make $50 a day.
Recommended reading: How To Make $100 A Day
1. Sell printables
Earning $50 a day can be possible with printables. Making and selling things on Etsy is a super creative way to earn money on the internet. It’s especially great for people who are into art and creativity to make some extra cash.
Printables are digital files that customers can download and print on their own. Some examples of what you can sell on Etsy include shopping lists, gift tags, art you can print and hang on your wall, travel checklists, and coloring pages.
Plus, if you want to learn how to make $50 dollars a day in passive income, then selling digital products like printables is one option to start with.
I recommend reading How I Make Money Selling Printables On Etsy to learn more.
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.
2. Proofreading
Earning $50 a day might seem tricky, but it’s totally possible if you try proofreading. That’s when you read writing to catch and fix mistakes.
If you like spotting mistakes in writing and want to make $50 every day, then learning to proofread could be a good fit for you.
Proofreading can be something you do on the side or turn into a full-time job that you can do from home. And yes, you can definitely make $50 a day with it. Lots of proofreaders make around $40,000 a year or even more.
To learn more about proofreading, please read How To Start A Proofreading Business And Make $4,000+ Monthly (this is actually an interview with my sister-in-law, who is a very successful proofreader and editor!).
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This free 76-minute workshop answers all of the most common questions about how to become a proofreader, and even talks about the 5 signs that proofreading could be a perfect fit for you.
3. Blogging
When I first started blogging, one of my goals was to make $50 a day. I have now completely surpassed that goal by a lot, so I know that it is possible!
Starting a blog can be an exciting way to earn some extra cash. You might be surprised to find out that blogging can be quite affordable to start. With a little bit of effort, your blog just might become a place where you can share what you love, and earn money doing it.
A blog is a website that can be about whatever topic you are interested in writing about, such as personal finance, travel, food, organization, family, pets, and more.
You can learn how to start a blog for free at How To Start A Blog FREE Course. In this free course, I teach you what you need to know about starting a blog, from the technical stuff to making your first money and getting people to read it.
There are also many other ways to make money similar to this as well, such as by starting a YouTube channel or TikTok.
4. Answering paid online surveys
Making $50 a day from just surveys would be hard, I will not lie. But, you can combine answering paid online surveys with some other side hustles so that you can reach your $50 a day goal.
When I was paying off my student loans, I made sure to fill out lots of surveys every week. I did it before work, during my lunch break, or after work. It was great because I could earn money from survey sites whenever I had free time.
Survey companies pay you to do things like answer surveys, watch videos, and try out products. Sometimes, they even give you free products so you can test them out and give your opinion.
Here are some online survey companies that pay you for your opinions:
American Consumer Opinion
Survey Junkie
Swagbucks
InboxDollars
Branded Surveys
Prime Opinion
Five Surveys
User Interviews – This is a great site for online focus groups that pay over $50.
Pinecone Research – This is a great site that occasionally lets you test out physical products (I was once sent toilet paper to review).
5. Bookkeeping
If you’re good with numbers, bookkeeping is a way to make $50 a day. Bookkeepers help businesses keep track of their finances. This job can be done from home, making it super flexible.
You don’t need to be an accountant or have any previous experience. This is a skill that anyone can learn and then do from home.
This job can make you more than $40,000 a year, and there’s a lot of potential for advancement. Many different kinds of businesses need bookkeepers, so it’s a great career choice to begin with.
Recommended reading: Online Bookkeeping Jobs: Learn How To Get Started Today
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This free training will teach you what you need to know to become a virtual bookkeeper and make money from home.
6. Sell dog treats
Starting a dog treat business at home is a fun way to make an extra $50 a day.
People love their pets and are willing to spend money on homemade, quality treats. With a low starting cost, you can bake treats right in your kitchen!
You can create all sorts of goodies like cupcakes, cookies, cakes, and more, just for dogs.
You can learn more at How I Make $4,000 Per Month Baking Dog Treats (With Zero Baking Experience!).
7. Walk dogs
You can easily start getting clients by offering to walk dogs or pet sit in your neighborhood or town.
Many people need trustworthy people to look after their pets while they’re at work or away, and by offering this service, you can earn a good amount of money each day.
Here are some possible earnings:
Dog walking usually earns you between $15 to $35 an hour per dog.
For overnight pet sitting, rates can start at $25 per day and go up.
If you watch two dogs a day at $50 each, that’s a neat $100 per day.
I really like using Rover for dog walking, and it’s what I’ve used in the past. I like how user-friendly the site is, and there are always a bunch of pet owners searching for dog walkers, which means there’s plenty of demand. There are also other great sites out there, depending on what you’re interested in!
My sister and my mother-in-law are both pet sitters, and they really enjoy it!
8. Flip items for resale
Flipping items for a profit is a way to make an extra $50 a day. Flipping means you buy something at a lower price and sell it for more. And, you can start by selling stuff that you already have!
I have sold a lot of things online over the years, from clothing to furniture and even old tires.
You might have clothes you don’t wear, an old phone, books, unused gift cards, CDs, DVDs, kitchen items, jewelry, and more to sell. The possibilities are endless. I’ve heard that the typical household has about 300,000 things, so I bet you could look around your home and find some items to sell pretty easily.
And, if you want to learn how to make $50 in 10 minutes (or any other short amount of time), then selling something you already have is usually one of the quickest options.
You can sell on many different sites and online platforms as well, such as eBay, Craigslist, Facebook Marketplace, and more.
I recommend watching the free webinar Turn Your Passion For Visiting Thrift Stores, Yard Sales & Flea Markets Into A Profitable Reselling Business In As Little As 14 Days to learn how to make money by flipping items.
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This free workshop will teach you how to get into the flipping business. It will teach you how to resell furniture, electronics, appliances, and anything else you can find.
9. Play games online
Earning $50 a day can be as fun as playing games on your computer or phone and being able to make money online.
Game apps pay real money rewards (as well as free gift cards) because they make their money from ads and in-app purchases. They share some of their earnings with you to keep you playing their games.
Here’s a quick list of the top game apps that pay real cash:
KashKick
Swagbucks
InboxDollars
You can get paid to play games like Coin Master, Monopoly, Yahtzee, and Bingo.
Recommended reading: 23 Best Game Apps To Win Real Money
10. Deliver groceries
Instacart is a popular website where you can earn extra cash by shopping for and delivering groceries. It lets you use your spare time to make some additional money.
I have used Instacart many times to order groceries for myself, and it is such a helpful service.
When you work with Instacart, you can make up to $25 per hour in the best cases, but typically, most drivers earn around $15 per hour.
You can learn more at Instacart Shopper Review: How much do Instacart Shoppers earn?
11. Deliver food
Earning $50 a day can be as simple as delivering food!
With the boom of food delivery apps, you have many options to choose from. Apps like Grubhub, DoorDash, and Uber Eats let you pick up food from restaurants and deliver it to hungry customers.
12. Freelance writing
If you want to earn $50 a day, freelance writing is a smart choice. You can write about things you know and love, and there are plenty of places looking for your words!
New freelance writers can typically make around $50 per article that they write. And, as you gain experience, you can increase your fee. I know many freelance writers who make $200+ per article and even some who make $1,000 or more per article.
Being a freelance writer has been one of my gigs for many years, and it is a great way to earn extra cash. You get to make your own schedule, call the shots as your own boss, write about topics you’re interested in, and more.
Recommended reading: 14 Places To Find Freelance Writing Jobs – (Start With No Experience!)
13. Online tutoring
Would you like to earn extra cash by sharing your knowledge? Online tutoring could be a great fit for you! With the internet, you can connect with students all over the world.
As a tutor, you might spend 30 minutes to an hour teaching a lesson, answering questions online, or doing one-on-one video sessions with students.
The amount of money you can make depends on factors like the subject you’re tutoring, the length of the session, and more. For instance, tutoring in advanced subjects like college calculus usually pays more than tutoring in elementary school math.
14. Sell photos
Did you know your photography skills can become a way to earn some extra cash? It’s true! With the right approach, you can start making $50 a day or more by selling your photographs.
One of the easiest ways to start earning from your photos is by selling them on stock photo websites. These sites act as a middleman between you and customers who need photos for their own projects. You can sell pictures that you’ve already taken or capture new images for this purpose.
Places to sell photos include:
Shutterstock – This is a well-known site where you can upload photos and earn money every time they’re downloaded.
iStock by Getty Images – Here, you can sell your images across different platforms, and whenever someone downloads them, you earn income.
Adobe Stock – If you join Adobe Stock, you can potentially earn from the images that users download for their creative needs.
Recommended reading: 18 Ways You Can Get Paid To Take Pictures
15. Virtual assistant
Are you good at organizing things and helping others stay on track? If yes, then virtual assisting might be a great way for you to make $50 a day.
As a virtual assistant, you might handle tasks like managing social media, formatting and editing content, scheduling appointments or travel, managing emails, and much more. Essentially, you get paid to take care of any task in someone’s business that they don’t have to do themselves.
Typically, you can start making around $15 to $20 per hour as a virtual assistant, but sometimes you might even earn double or triple that when you’re just starting out.
Recommended reading: Best Ways To Find Virtual Assistant Jobs
16. Online transcription
Transcription work is becoming more popular, and you can find online jobs from home as a transcriptionist. Your job would involve listening to audio and turning it into written text.
The average pay for online transcriptionists usually falls between $15 to $30 per hour, with newbies often starting at the lower end of that scale.
A helpful free workshop to take is Is a Career in Transcription Right for You? You’ll learn how to get started as a transcriptionist, how you can find transcription work, and more.
17. Affiliate marketing
Affiliate marketing lets you make money by promoting products or services online, and you don’t need anything special to begin.
With affiliate marketing, when someone you refer buys a product through your special link, you earn a commission. It’s as straightforward as that.
First, choose products you genuinely like and think others will enjoy too. Next, join their affiliate program. They’ll give you a unique affiliate link. This link keeps track of who clicks on it and makes a purchase based on your recommendation.
For me, I love affiliate marketing. I think it’s one of the best ways to make at least $50 a day, and it is what I do to make money with my online business.
I recommend signing up for Affiliate Marketing Tips For Bloggers – Free eBook to learn more.
18. Rent out your spare room
If you have an extra room in your home, renting it out could be a smart way to earn some additional cash.
Having a roommate, whether it’s someone living with you full-time or occasionally renting out a spare room on Airbnb, can help you earn extra cash every month.
It might not add up to $50 every day, but by having a roommate or renting out a spare room on Airbnb, you could make several hundred dollars a month, or even over $1,000 extra each month.
Some people take it even further by purchasing a large house with multiple bedrooms and renting out every single room (also known as house hacking). This way, you might have three or four renters living with you. This arrangement could cover your entire mortgage payment and maybe even leave you with some extra spending money on top of what you earn from having roommates.
Over the years, I’ve had many roommates. When I owned a home, I often rented out one or even two spare bedrooms to long-term renters, including a friend and my sister, to earn extra money. This helped us manage our monthly expenses better, reducing financial stress. We could earn around $300 to $400 per month for each bedroom. Although living with roommates isn’t always smooth sailing (arguments can happen), setting clear ground rules and having a contract can help prevent conflicts.
19. Rent out your RV
If you have an RV just sitting around, you might be able to earn $50 to $300 a day, or even more, by renting it out.
Many people have RVs that they don’t use very often. Instead of letting it sit there, you could earn extra cash by renting it out. Indeed, you might be able to make $100 a day or more by renting out your RV to others.
RVshare is helping travelers save money by cutting out the middleman through renting RVs directly from owners.
It’s like Airbnb, but for RVs.
Recommended reading: How To Make Extra Money By Renting Out Your RV.
Frequently Asked Questions
Below are answers to common questions about how to make $50 a day.
How to make $50 in one day?
You can make $50 in one day by selling services like pet sitting, house cleaning, or freelancing online. Platforms like TaskRabbit connect you with people who need quick assistance with chores and other odd jobs as well.
How can I make $100 in one day?
To earn $100 in one day, you might want to try a combination of gigs such as driving for Uber or Lyft, starting a freelance business (like writing, graphic design, or proofreading), or selling high-demand items online.
How to make $50 dollars in 10 minutes?
Making $50 in 10 minutes can be a challenge, but it can be possible by selling something online where you can get cash immediately. For example, you may be able to sell something that you have, like an old cell phone that you no longer use, and get cash for it.
What are some easy ways to earn $50 a day without leaving home?
You can earn $50 a day from home by tutoring online, transcribing audio files, or selling your craft on websites like Etsy. I make over $50 online every day from home, so it is definitely possible.
What are some quick methods to make $50 fast for beginners?
Beginners can make $50 quickly by doing tasks like yard work, signing up for food delivery services, or selling unused items on local marketplaces.
How can a kid earn $50 in just one day?
Kids can earn $50 in one day by setting up a lemonade stand, doing extra chores for neighbors, babysitting, or tutoring younger children.
How to make $50 dollars a day in passive income?
To earn $50 a day in passive income, you may want to rent out rental properties, invest in dividend stocks, or create online courses or ebooks that sell over time.
How To Make $50 a Day – Summary
I hope you enjoyed this article on how to make $50 a day.
You have lots of choices when it comes to being able to make $50 a day, so I recommend starting by picking gigs that match what you like and how you live.
For example, if you like giving your opinions, online surveys can make you money. Or, if you enjoy being out and about, delivering food or groceries might be good for you. If you’re into freelance work, there are tons of opportunities in writing, helping online, and teaching.
It’s possible to make $50 every day, and with some help, you can try out these options to see what works best for you.
Retail banking involves offering financial services to individual consumers rather than businesses or other banks. It encompasses a range of products and services, such as checking and savings accounts, mortgages, personal loans, credit cards, certificates of deposit (CDs), and more.
Retail banking is different from corporate banking, which is the part of the banking industry that serves large companies and corporate customers. Retail banks can be local community banks, online banks, or the divisions of large commercial banks. Credit unions also offer retail banking.
Read on for a closer look at what retail banking is and how it differs from corporate banking.
What Is Retail Banking?
Retail banking, also known as personal or consumer banking, refers to financial services provided to individuals. This type of banking is designed to serve the general public and to help people and families manage their money, obtain credit, and save for the future.
Retail banks focus on making banking services easily accessible, either through physical branches, ATMs, and/or online platforms. These banks play a crucial role in the economy by offering checking accounts, high-yield savings accounts, certificates of deposit, loans, and other financial products that help individuals safely store, manage, and grow their money.
Though some retail banks also work with small businesses, retail banking is different from corporate (also known as commercial) banking, which involves working with commercial entities, such as large businesses, governments, and institutions.
Most large-scale banks have retail banking divisions. Credit unions and smaller banks, on the other hand, may be exclusively focused on retail banking.
Recommended: 12 Things To Consider When Choosing A Bank
How Does Retail Banking Work?
Retail banking works by offering financial products and services tailored to consumers. These services are designed to help individuals and families manage their finances efficiently, save for the future, and access credit cards and loans. Retail banks make money primarily through interest on loans, fees for services, and charges for various banking products.
Features of Retail Banking
Retail banking offers a hub for all of your basic financial transactions. Here’s a look at some of the products and services they provide.
• Savings and checking accounts: Retail banks offer savings and checking accounts to help individuals manage their money. Savings accounts typically earn interest, while checking accounts provide easy access to funds for day-to-day transactions.
• Consumer loans: Retail banks commonly offer personal loans, auto loans, and home mortgages. These loans can help people finance significant purchases or investments, such as buying a home or car.
• Credit Cards: Retail banks issue credit cards that allow consumers to borrow money up to a certain limit for purchases. These cards often come with rewards, cash back, and other incentives.
• Online and mobile banking: Retail banks typically provide online and mobile banking services, allowing you to manage your accounts, transfer money, pay bills, and access other banking services from your computer or smartphone.
• Investment services: Some retail banks offer investment products like mutual funds, retirement accounts, and brokerage services to help customers build wealth over time.
• Customer service: Retail banks typically emphasize customer service. Many provide personalized financial assistance through branch staff, call centers, and online support.
Types of Retail Banks
Retail banks come in various forms, each catering to different customer needs and preferences. Here’s a look at some of the main types of retail banks.
• Commercial banks: Many people access retail banking through one of the large, commercial banks, which generally offer a retail banking division along with corporate banking services.
• Credit unions: Credit unions are nonprofit financial institutions owned by their members. They often provide similar services to commercial banks but with a focus on serving the financial needs of their members, usually offering lower fees and better interest rates.
• Online banks: Online banks operate exclusively online, without physical branches, though you typically have access to a partner network of ATMs. They often offer higher interest rates on savings accounts and lower fees due to reduced overhead costs.
• Community Banks: Community banks are smaller, locally-focused institutions that prioritize serving the needs of their local communities. They offer personalized customer service and often have a strong understanding of their local markets.
Recommended: Big Banks vs Small Banks: Key Differences?
How Is Retail Banking Different From Corporate Banking?
Retail banking and corporate banking represent two different sectors of the banking industry, each serving different customer bases and offering different services.
Retail banking focuses on individual consumers, providing them with products like bank accounts, personal loans, and credit cards. Corporate banking, on the other hand, serves businesses and corporations, offering services like business bank accounts, commercial loans, trade finance, and employer services.
Transactions in retail banking are typically smaller in size and higher in volume compared to corporate banking, which tends to focus on larger, more complex transactions.
If you’re wondering whether you would be better served by retail vs. corporate banking, here’s a snapshot how the two compare.
Retail Banking
Corporate Banking
Client base
Individual consumers
Businesses, institutions, banks, government entities
Products and services
Personal checking/savings accounts, mortgages, personal loans, credit cards
Business checking/saving accounts, business loans, merchant services, global trade services, employee benefits plans
Loan amounts
Lower
Higher
Transaction frequency and amounts
High number of transactions for low amounts
Low volume of transactions for more significant amounts
The Takeaway
Retail banking is the public face of banking that provides banking services directly to individual consumers rather than businesses or other banks. Most of us bank at a retail bank or retail division of a large commercial bank whether we realize it or not.
Whether you use a brick-and-mortar bank, online bank, or credit union, retail banking offers products and services that allow you to manage your money, access credit, save for the future, and work toward your financial goals.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.
FAQ
What is an example of retail banking?
An example of retail banking, also known as consumer banking, is when an individual opens a savings account at a local bank. The bank then allows them to deposit funds, withdraw money, and earn interest on their deposits. The same bank might also offer them a checking account for daily transactions, a mortgage to buy a home, and a credit card for everyday purchases. These services are all examples of retail banking, which is aimed at meeting the personal financial needs of individual consumers.
What are the largest retail banks?
The largest banks in the U.S. that offer retail banking include:
• Chase
• Bank of America
• Wells Fargo
• Citibank
• U.S. Bank
• PNC Bank
• Goldman Sachs Bank
• Truist Bank
• Capital One
• TD Bank
Who uses retail banking?
Retail banking is used by individual consumers to manage their personal finances. This includes:
• Students
• Young adults
• Working professionals
• Couples
• Families
• Retirees and seniors
• Small business owners
What are the retail banking products?
Retail banking offers a variety of products and services tailored to the financial needs of individual consumers. These include:
• Savings accounts
• Checking accounts
• Personal loans
• Mortgages
• Credit cards
• Certificates of deposit (CDs)
• Investment products
• Online and mobile banking services
• Debit cards
Photo credit: iStock/Passakorn Prothien
SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
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.
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.
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.
Ramp and Brex are both financial technology companies that aim to help business owners track and manage company spending with software tools and financial products, including corporate credit cards.
Business owners can issue unlimited virtual and physical credit cards with both Brex and Ramp. Then, they can limit spending on those individual cards, create budgets, automatically categorize expenses and prompt users to upload receipts.
The key differences? Brex’s eligibility criteria focus on venture-backed startups, enterprise companies and businesses with annual revenue in the millions. It’s best for businesses that fall into those buckets and want a linked Brex business account for banking.
Ramp serves a broader group of small businesses, but they’ll have to do their banking elsewhere.
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Ramp vs. Brex: Comparison at a glance
Business entities that can qualify
Corporations, LLCs, limited partnerships and nonprofits.
Corporations, LLCs and limited partnerships. Nonprofits may be approved on a case-by-case basis.
Bank balance and revenue requirements to qualify
At least $75,000 in cash.
For daily repayments: More than $1 million per year in revenue, more than 50 employees or equity investment.
For monthly repayments: Accelerator or venture funding, at least $100,000 in angel investment and at least $50,000 in cash. Enterprise companies need at least $400,000 per month in revenue.
Personal guarantee
Not required.
Not required.
Annual fee
Credit card rewards
1.5% cash back on all spending.
7 points per dollar spent on rideshares and taxis.
4 points per dollar on travel booked through the Brex portal.
3 points per dollar on restaurants.
2 points per dollar on software.
1 point per dollar on all other purchases.
Rewards rates may vary for certain customers.
Customer support
Phone support available daily from 7 a.m. to 10 p.m. ET. Support request form available.
Live chat and phone available 24/7.
Do you have less than $50,000 cash on hand? Look at the BILL Divvy corporate card instead. That card works similarly to Ramp and Brex — it’s linked to expense management software, you’ll have to pay off your balance at the end of each statement period and it offers some rewards on your spending — but you may be able to qualify with as little as $20,000 in the bank.
Ramp card pros and cons
Pros
No annual fee or foreign transaction fees.
Simple, straightforward rewards.
No personal guarantee or credit check.
Direct integrations with popular tools and card-level spending controls and alerts.
Cons
Balance must be paid in full each month.
Not available to sole proprietors or unincorporated businesses.
Where Ramp wins against Brex
Available to a wider variety of entrepreneurs
Ramp is available to most incorporated or registered companies, provided they have at least $75,000 in the bank. While that still leaves out a large number of business owners — the majority of entrepreneurs in the U.S. are sole proprietors — it’s much more inclusive then Brex, which requires venture or angel investment or annual revenue in the millions.
Flat-rate cash back
Flat-rate cash-back business credit cards offer two key advantages: You don’t have to worry about making purchases through a specific portal to maximize rewards, and you’ll get money back on all your spending, regardless of whether it falls into certain bonus categories. Ramp’s rewards structure beats Brex’s in terms of simplicity, especially if your business doesn’t spend much on travel.
Brex card pros and cons
Pros
No annual fee or foreign transaction fees.
New cardholder bonus offer.
Bonus categories with high rewards rates.
No personal guarantee.
Cons
Complicated rewards structure.
High capital requirement for approval.
Daily repayment may be required.
Not available to most small businesses.
Where Brex wins against Ramp
Cash management account included
Alongside its business credit card and spending management software, customers get access to the Brex business account. This is a business cash management account that offers no monthly fee, unlimited transactions and a high annual percentage yield (APY) on cash invested in money market funds (uninvested cash doesn’t earn interest).
All these features make Brex a good choice for startups with venture investment sitting in the bank. Expanded Federal Deposit Insurance Corp. (FDIC) insurance protects up to $1 million in uninvested cash, and you can earn returns on the rest.
Rewards on travel spending
If your business spends significant amounts on travel and hospitality expenses and you’re willing to book flights and hotels through Brex’s portal, then Brex is likely to offer much more lucrative rewards than Ramp. Its rewards rates are up there with traditional business travel credit cards — including up to 3x points on restaurants, 4x on travel portal purchases and 7x on rideshares.
Traditional business credit cards vs. Ramp and Brex
In some instances, corporate cards like Ramp and Brex won’t make sense for your business. Instead, you should consider a traditional business credit card if:
Your business is a sole proprietorship. Corporate credit cards aren’t available to sole proprietors.
Your business doesn’t meet Ramp and Brex’s minimum account balance requirements. Traditional business credit cards focus on your personal credit history — not your bank account balance — when evaluating your application for a card.
You want the option to pay off large purchases over several months. Corporate credit cards don’t let you carry a balance from one statement period to the next, and some may require you to make payments as often as every day.
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Annual fee
$0
Annual fee
$150
Annual fee
$0
Regular APR
18.49%-24.49% Variable APR
Intro APR
0% intro APR on Purchases for 12 months
Intro APR
N/A
Intro APR
0% intro APR on purchases for 12 months from the date of account opening
Recommended credit score
690850good – excellent
Recommended credit score
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Recommended credit score
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Ramp vs. Brex: Which one is right for your business?
For most small-business owners, Ramp is more likely to be a fit simply because it’s easier to qualify for. The card’s flat-rate cash back offers simple rewards on all your business spending. Plus, you’ll have access to powerful software that you can use to monitor and control expenses across the company.
If your business is a venture-backed startup, however, Brex is worth a look. That’s especially true if your team frequently travels for business, since you’ll be eligible for extra-high rewards rates when you use the Brex card on travel bookings, restaurants and rideshares. You’ll be supported by similar expense management software, too.
An irrevocable letter of credit (or ILOC) is a written agreement between a buyer (often an importer) and a bank. As part of the agreement, the bank agrees to pay the seller (typically an exporter) as soon as certain conditions of the transaction are met. These letters help reduce a seller’s concern that an unknown buyer won’t pay for the goods they receive. It also helps eliminate a buyer’s concern that an unknown seller won’t send the goods the buyer has paid for.
Irrevocable letters of credit are often found in international trade, though they can be used in other types of financial arrangements to ensure that a seller will be paid, even if the buyer fails to uphold their end of the bargain.
Key Points
• An irrevocable letter of credit is a written agreement between a bank and a buyer to guarantee payment, ensuring that the seller will be paid even if the buyer fails to fulfill their obligations.
• Irrevocable letters of credit cannot be canceled or modified in any way without the explicit agreement of all parties involved.
• Irrevocable letters of credit are commonly used in international transactions but can be used in other situations as well.
• Alternatives to irrevocable letters of credit include trade credit insurance and standard letters of credit, which offer different levels of flexibility and protection.
What Is an Irrevocable Letter of Credit?
Simply defined, an irrevocable letter of credit represents an agreement between a bank and a buyer involved in a financial transaction. The bank guarantees payment will be made to the seller according to the terms of the agreement. Since the letter is irrevocable, that means it cannot be changed without the consent and agreement of all parties involved.
Irrevocable letters of credit can also be referred to as standby letters of credit. Once an irrevocable letter of credit is issued, all parties are contractually bound by it. This means that even if the buyer in a transaction doesn’t pay, the bank is obligated to make payment to the seller to satisfy the agreement.
Having an irrevocable letter of credit in place is a form of risk management. The seller is guaranteed payment from the bank, which can help to reduce concerns about the buyer failing to pay. And it ensures that the seller will follow through on their obligations by providing whatever is being purchased through the agreement. In simpler terms, a standby letter of credit or irrevocable letter of credit is a sign of good faith on the part of everyone involved in a transaction. 💡 Quick Tip: Banish bank fees. Open a new bank account with SoFi and you’ll pay no overdraft, minimum balance, or any monthly fees.
How Does an Irrevocable Letter of Credit Work?
An irrevocable letter of credit establishes a contractual agreement between a buyer, a seller, and their respective banks. It effectively creates a safeguard for both the buyer and the seller, in that:
• Buyers are not required to forward payment until the seller provides the goods or services that have been purchased.
• Sellers can collect payment for goods and services, as long as the conditions outlined in the letter of credit are met.
The bank issuing the letter of credit acts as a go-between for both sides, guaranteeing payment to the seller even if the buyer doesn’t pay. Assuming the buyer does fulfill their obligations, they would then make payment back to the bank. In a sense, this allows the buyer to borrow from the bank without formally establishing credit in the form of a loan or credit line. (Check with your financial institution to learn what fees may be involved.)
Before an irrevocable letter of credit is issued, the bank will first verify the buyer’s creditworthiness. Assuming the bank is reassured that the buyer will, in fact, repay what’s owed to complete the purchase, it will then establish the irrevocable letter of credit to facilitate the transaction between the buyer and seller. Irrevocable letters of credit are communicated and sent through the SWIFT banking system.
Recommended: How Do Banks Make Money?
Irrevocable Letter of Credit Specifications
The exact details included in an irrevocable letter of credit can depend on the situation in which it’s being used. The conditions that are set for the completion of the transaction will also matter. But generally, you can expect an irrevocable letter of credit to include:
• Buyer’s name and banking information (that is, their bank account number and other details)
• Seller’s name and banking information
• Name of the intermediary bank issuing the letter of credit
• Amount of credit that’s being issued
• Date that the letter of credit is issued and the date it will expire
An irrevocable letter of credit will also detail the conditions that must be met by both the buyer and seller in order for the contract to be valid. For example, the seller may need to provide written verification that the goods or services referenced in the agreement have been provided before payment can be issued. The letter of credit must be signed by an authorized bank representative. It may need to be printed on bank letterhead to be valid.
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Do I Need an Irrevocable Letter of Credit?
You may need an irrevocable letter of credit if you’re doing business with someone in a foreign country. You may also require one if you are conducting a transaction with a new company or individual (one with which you don’t yet have an established relationship).
Irrevocable letters of credit can help to mitigate some of the risk that goes along with international transactions. These letters ensure that if you’re the seller, you get paid for any products or services you’re providing. They also protect you if you’re the buyer, promising that products or services are delivered to you.
An irrevocable letter of credit could also come in handy if you’re still working on building credit for your business and you’re the buyer in a transaction. The bank will pay the money to the seller; you’ll then repay the bank. Payment may be required in a lump sum from your business bank account or another source. Or the bank may also offer the option of repaying it in installments over time. Repaying your obligation could help to raise your business’s creditworthiness in the bank’s eyes. This may make it easier to take out other loans or lines of credit later. 💡 Quick Tip: Most savings accounts only earn a fraction of a percentage in interest. Not at SoFi. Our high-yield savings account can help you make meaningful progress towards your financial goals.
Alternatives to Irrevocable Letters of Credit
An irrevocable letter of credit is not the only way to do business when engaging in international transactions. You may also consider trade credit insurance or another type of letter of credit instead.
Trade Credit Insurance
Trade credit insurance, also referred to as accounts receivable insurance or AR insurance, is used to insure businesses against financial losses resulting from unpaid debts. You can use trade credit insurance to cover all transactions or limit them to ones where you believe there may be a heightened risk of loss, such as transactions involving foreign businesses.
A trade credit insurance policy protects your business in the event that the other party to a financial agreement defaults. It can insulate your accounts receivable against losses if an unpaid account turns into a bad debt. Purchasing trade credit insurance may be an easier way to manage risk for your business overall, as it’s less involved than an irrevocable letter of credit.
Recommended: Business Loan vs Personal Loan: Which is Right for You?
Letters of Credit
A letter of credit guarantees payment from the buyer’s bank to the seller’s bank in a financial transaction. Like an irrevocable letter of credit, it establishes certain conditions that must be met in order for the transaction to be completed. But unlike an irrevocable letter of credit, a standard letter of credit can be revoked or modified.
You might opt for this kind of letter of credit if you’re doing business with someone you don’t know and you want reassurance that the transaction will be completed smoothly. A regular letter of credit may also be preferable if you’d like the option to modify or cancel the agreement.
The Takeaway
An irrevocable letter of credit is something you may need to use from time to time if you run a business and regularly deal with international transactions. It adds a layer of protection to buying and selling, as a bank is saying it will cover the transaction. An ILOC, as it’s sometimes known, can provide reassurance when working with a new business or establishing your company overseas. The letter cannot be changed, so you’re getting solid peace of mind.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.
FAQ
What is the difference between a letter of credit and an irrevocable letter of credit?
A letter of credit and irrevocable letter of credit are largely the same, in terms of what they’re designed to and in what situations they can be used. The main difference is that unless a letter of credit specifies that it is irrevocable, it can be changed or modified by the parties involved.
What is the cost of an irrevocable letter of credit?
You generally need to pay a transaction fee for an irrevocable letter of credit. The fee is typically a small percentage of the transaction amount. The rate will vary from bank to bank.
Does an irrevocable letter of credit expire?
Yes, an irrevocable letter of credit will typically state the date by which the seller must submit the necessary paperwork in order to receive payment.
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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
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Want to make extra money? Here are 21 ways to get paid to answer questions from home. Making extra money has become easier than ever, and answering questions online is a flexible way to earn cash. There are websites and apps where you can share what you know about different topics to make money. It’s…
Want to make extra money? Here are 21 ways to get paid to answer questions from home.
Making extra money has become easier than ever, and answering questions online is a flexible way to earn cash.
There are websites and apps where you can share what you know about different topics to make money. It’s a convenient way to make some extra cash on the side, and you can do it whenever it fits into your schedule.
Plus, you get to answer all kinds of interesting questions, from easy surveys to giving expert advice.
I have been getting paid to answer questions for years, through many of the ways listed below, so I know that these are real!
21 Ways To Get Paid To Answer Questions
Below are 21 ways to get paid to answer questions:
1. JustAnswer
Are you good at fixing cars or know why cats behave the way that they do? If you have knowledge in a specific area, JustAnswer might be your route to earning extra cash. On JustAnswer, individuals and professionals like you get paid to share their expertise and help others with their questions on your own schedule.
On JustAnswer, there are different types of experts like mechanics, doctors, lawyers, veterinarians, home experts, appraisers, consultants, computer and tech experts, and more. They have many categories with questions that need to be answered.
When someone has a question, they can go to JustAnswer and pay a fee. Then, JustAnswer finds an expert who knows about the topic to answer their question (these are typically detailed answers with insight).
JustAnswer says that if you’re qualified and answer questions online, your earning potential could be between $2,000 and $7,000 every month.
To become an expert on JustAnswer, you apply online. In this application process, they check your credentials to make sure you’re qualified as well as do a background check. Once approved, the JustAnswer team gives you a quick meeting to show you how to use the platform. It usually takes about a week to get verified after you apply.
You can get paid through direct deposit, PayPal, or Venmo.
2. User Interviews
At User Interviews, you can make between $50 and $100 an hour simply by participating in market research studies.
Big companies such as Macy’s, Home Depot, Spotify, Trip Advisor, Pinterest, and Amazon use User Interviews to hear what people think about their new products, apps, and websites.
You don’t just fill out surveys; these studies involve interacting with interviewers. They’ll ask questions, and your honest feedback can influence products and services.
Every month, User Interviews launches over 2,000 new studies. Last year, they paid over 87,000 participants.
I did a user interview and earned $400 for just one hour of work. It was easy – all done online with a video call. They wanted my thoughts on a new feature for a website.
Please click here to learn more about User Interviews.
3. Become a blogger
Starting a blog can be a fun way to share what you know and make money. Blogging means writing articles, or “blog posts” that get put on a website. You can write about lots of topics, like travel, food, or helping others with your expert advice.
When you blog, you can make money such as by:
Ads – You can put ads on your site. When people visit your blog and see or click the ads, you get paid.
Affiliate marketing – This is when you talk about products and give a referral link. When someone buys the product using your link, you earn a commission.
Selling products – Create things like ebooks or courses. When people buy them, you make money.
I started Making Sense of Cents in 2011. Since then, it’s helped me make over $5,000,000. I started it just to share my money journey, without even knowing that websites could make money.
And, I get paid to answer questions all the time! Many of the articles that I write have been inspired by questions that I have personally been asked by my readers. Readers will send me questions via email every day, and many times I will turn these questions into a new blog post.
You can learn more about starting a blog at How To Start A Blog FREE Course. Over 80,000 people have taken this course already. Join for free, and I’ll teach you what you need to know from setting up your blog to making money and getting readers.
There are other ways similar to this that you can get paid to answer questions too, such as by starting a YouTube channel.
4. Swagbucks
Swagbucks is a well-known rewards site where you earn money for doing surveys and other tasks. It began in 2008, and every day they give out 7,000 gift cards to their members. Yes, each day!
I’ve used Swagbucks to get Amazon gift cards and PayPal cash without much work. I’ve earned over 110 gift cards from them over the years.
When I logged into Swagbucks, I had 26 surveys to choose from. Each one took less than an hour and paid less than $10. For instance, one asked about my dining preferences, like how I find new places to eat and what kinds of food I like when I go out.
Another positive of Swagbucks is that payouts are easy to get and have a low minimum threshold.
Please click here to learn more about Swagbucks.
5. Freecash
Freecash is an online platform where you can earn extra cash. It teams up with businesses that need consumers to check out their products.
You sign up and do tasks like trying out apps, playing fun games, or answering surveys. Many times, you will be asked to answer questions and give your review on an app.
The amount you earn with Freecash varies. If you spend some time on it every day, you might make around $10 daily. Some users spend more time and report earning hundreds monthly, with a few reaching a thousand or more each month as well.
Click here to sign up for Freecash.
6. American Consumer Opinion
American Consumer Opinion is a free paid online survey company I really like. They pay you for each survey you do. You can make between $1 and $50 per survey, depending on how long it is.
American Consumer Opinion has paid over $30,146,855 to people who take surveys, with over 20 million surveys completed. They’re one of the most popular survey sites online.
You can sign up for American Consumer Opinion here.
7. InboxDollars
InboxDollars is a website where you can earn money by doing things like taking surveys, playing games, watching videos, shopping online, and more.
Most surveys on InboxDollars pay between $0.50 and $5.00 and take 3 to 25 minutes. If you meet certain criteria, you could even earn $10, $20, or more per survey.
By signing up through my link, you will receive a free $5 bonus! Sign up for InboxDollars here.
8. Survey Junkie
Survey Junkie is a platform where you can make money by sharing your opinion. If you take three surveys every day, you can earn up to $40 a month. It’s a simple way to add some extra cash to your wallet just by answering questions.
To make the most out of Survey Junkie, act fast when new surveys come out. Surveys have limited spots and can fill up quickly. Fill in your surveys honestly to avoid disqualification. Plus, by taking a quick tour of the site, you can snag some extra points.
Please click here to sign up for Survey Junkie.
9. Branded Surveys
Earning extra cash with Branded Surveys is both easy and rewarding. When you sign up, which is totally free, you can start taking surveys that pay you between $0.50 and $5.00 each.
Branded Surveys is a free survey company where you can earn cash and gift cards like Amazon and iTunes. They have over 2 million members and have paid out over $24,000,000 to their members. If you join today, you’ll get a free 100-point sign-up bonus.
There are many different payment options as well, such as gift cards and PayPal cash.
You can sign up for Branded Surveys here.
10. Prime Opinion
Prime Opinion is a survey platform that lets you make money by sharing your thoughts in online surveys. It’s easy to use and rewards you with PayPal cash or gift cards for your opinions, all without leaving home.
When I logged in recently, I had over 40 different available surveys that I could take, ranging from just a few minutes to around an hour.
There are many payout options too, such as Visa cards, PayPal cash, and gift cards.
Please click here to join Prime Opinion and get up to a $5 free bonus.
11. Five Surveys
Five Surveys is a paid online survey site that is easy to use, and you can get paid to answer questions online. Once you complete five surveys, you can claim $5. So, you get paid $1 per survey no matter how short or long it is, as long as you complete it.
Once you’ve earned, withdrawing your money from Five Surveys is easy and you can pick from multiple methods to receive your funds, whether you prefer direct payment or redeeming rewards like gift cards for popular retailers.
Please click here to sign up for Five Surveys.
12. Chegg
Have you ever thought about making money while helping others with their homework?
Chegg is an option you might want to consider. Chegg is a platform where students ask for help on their schoolwork, and experts like you provide answers.
The payment on Chegg can vary. They have a system where you earn more based on the number of questions you answer.
13. HelpOwl
HelpOwl is a site where you can earn points for helping others with their questions.
You can get 1,000 points for your first accepted answer. For any answers after that, you can get 100 points. Plus, each time your answer is marked as helpful, you can get an extra 10 points. Manuals get you even more points (but are much more detailed).
Your points can be redeemed for Amazon and Walmart gift cards.
14. PrestoExperts
PrestoExperts is a site where you can share your expertise and get paid for helping others. It doesn’t matter where you are, as you can answer questions from your computer or phone.
If you are knowledgeable about topics like law, health, or even tutoring, you could be in demand. There are over 600 different categories that questions are asked about, so there is probably a topic that you can answer.
15. Studypool
Studypool is an online platform where you can earn money by helping students with their questions. If you’re an expert in a particular subject, you can make cash by giving students the answers and explanations they need.
Once you’re approved, you can start answering questions. You decide how much your help is worth and can set your own prices.
Tutors at Studypool get paid for each question they answer. But, the site does keep a commission. This commission can be between 15% and 30%, depending on how active you are on the platform.
16. BestMark
BestMark is a top mystery shopping company that I have personally used.
This is my favorite mystery shopping company, and it’s the one I’ve used for all my mystery shopping. I’ve done over 50 mystery shops with them, and I have been paid to answer many questions through their site.
BestMark has mystery shopping jobs at places like restaurants, beauty stores, clothing stores, electronic stores (like Best Buy), car dealerships, movie theaters, retail stores, phone calls (for example, where you call the store to evaluate their customer service over the phone), entertainment attractions (like go-kart tracks and theme parks), and banks.
Businesses use mystery shopping to check and improve their customer service and products. They hire mystery shoppers to act like regular customers, visit their places, and give detailed feedback. Your job is to observe, interact, and share your thoughts on the entire experience.
17. Premium.Chat
If you have a website or social media account with followers, then Premium.Chat gives you a way to earn money by sharing your expertise through texting. Whether you’re a coach, tutor, entertainer, social media influencer, model, teacher, or any kind of advisor, this platform may work for you.
You can earn money by text chatting and charging per minute (from $1.00 to $5.99) or up to $50 for a single chat. You can also get paid for video calls.
The platform manages billing and payments, so you can just focus on chatting. You’ll receive payments via direct deposit or PayPal on the 10th of each month for the previous month’s chats.
18. BetterHelp therapist
BetterHelp is a top online therapy platform where you can offer text therapy and schedule video sessions and make a full-time income.
There are over 33,000 therapists on this platform, and they are always looking for more therapists.
As a BetterHelp therapist, you can earn around $100,000 per year for working 40 hours a week. You also get a monthly health insurance stipend of $450 to $650, bonuses for high performance, and other benefits. They ask for at least 3 years of experience in therapy for adults, couples, or teens.
19. Maven
Maven is a site where you can earn money by sharing your expertise. If you’re someone with a wealth of knowledge in a specific field, Maven can be your platform to make money by answering questions.
Maven is an online course platform where you can create a course that answers questions. There are courses on all different kinds of subjects on Maven, such as AI, design, engineering, marketing, business, leadership, and more.
20. Weegy
Weegy is a question-and-answer site where anyone can ask a question and earn money by answering questions anywhere, anytime and from your desktop computer, tablet, or smartphone.
With Weegy, you can earn around 20 cents for each question you answer, on average. The amount may vary based on how accurate and detailed your answer is.
21. Online tutor
An online tutor is someone who helps another person learn more about a specific subject, such as math, grammar, science, physics, geography, and more.
As a tutor, you could spend 30 minutes teaching a lesson, a few minutes answering questions online, or having a one-on-one video lesson with a student.
You may get paid to help answer questions as a tutor for high school students, college students, or even elementary students. Many people need tutors!
I recommend reading 11 Best Places To Find Online Tutoring Jobs (Make $100+ an hour) to learn more.
Frequently Asked Questions
Below are answers to common questions about how to get paid to answer questions.
Can I get paid for answering questions?
Yes, you can get paid for answering questions. Websites like JustAnswer pay experts from different fields to answer users’ questions. If you’re knowledgeable in a specific area, you could earn money by helping others. There are other ways to get paid to answer questions as well, such as by creating an online course or starting a blog.
How much do you make on JustAnswer?
On JustAnswer, your earnings can vary widely based on your area of expertise and the complexity of questions you’re answering. The potential pay ranges from $5 to $35 per question, but it greatly depends on how much time and effort you invest.
Which app pays for answering questions?
Swagbucks is an app that rewards you for answering questions and completing surveys. By answering daily polls and trivia, you can accumulate points, which can then be converted into gift cards or cash.
What trivia app pays real money?
Swagbucks has trivia games that can pay real money. There are also other apps made for trivia, where you can earn cash by correctly answering questions on different topics.
Does Quora pay you to answer questions?
Quora doesn’t pay for questions and answers directly, but they do have a program called the Quora Partner Program. If you’re eligible and contribute high-quality content, you can earn money through it.
How To Get Paid To Answer Questions
I hope you enjoyed this article on how to get paid to answer questions.
If you like helping others or sharing what you know, you can earn money for it. Some are a side hustle, and others are a full-time job or business.
Depending on the website or app you use, you might get paid directly, earn points that you can turn into cash or gift cards, or even receive tips. Each place that pays you to answer questions has its own rules and topics, so you can pick the ones that interest you most and match your skills.
I have been earning a full-time income for years by answering questions for others, and I really enjoy it. From mystery shopping to surveys, focus groups, blogging, and more, I have done many of the ways to get paid to answer questions on the list above.
Are you interested in learning how to get paid to answer questions?
When you open an individual retirement account (IRA) or 401(k), you can generally choose from a variety of different types of investments, such as stocks, bonds, options, real estate, and more. You may also be able to put some of the money in a money market account, where it will typically earn a higher annual percentage yield (APY) than in a traditional savings account yet still remain liquid.
While you might choose to keep most of your retirement savings in potentially higher-return investments, it may make sense to keep some of your retirement funds in a money market account, since it is a relatively low-risk place to store cash. Even if the return may be lower than other investments, it’s predictable.
Another reason to have some of your retirement money in a money market account is to serve as a holding place as you sell investments or transfer money between investments.
Unlike a regular money market account, a money market account that is offered as a component of a retirement account is subject to the benefits and restrictions of those accounts. Here’s what else you need to know about retirement accounts that offer a money market component.
What Is a Money Market Account That Can Be Used for Retirement?
While there is no such thing as a “retirement money market account,” some retirement accounts allow you to keep some of your money in a money market within the account. The money market account (MMA) could be within a traditional, rollover, or Roth IRA, a 401(k), or other retirement account, which means those funds are governed by the rules of that account.
If the MMA is a component of a traditional IRA, that means you can contribute pre-tax dollars (up to certain limits), your money can grow tax deferred, and you won’t be able to withdraw funds before age 59 ½ without paying taxes and penalties.
Money held in the money market component is liquid. This is usually where money is held when you first transfer money into your retirement account, or when you sell other investments in your account. You can use the funds in the money market to purchase investments within the retirement account.
Recommended: The Different Between an Investment Portfolio and a Savings Account
What Is a Money Market Fund?
Bear in mind an important distinction: A money market fund, which is technically a type of mutual fund, is different from a money market account. A money market fund is an investment that holds short-term securities (and is not insured by the Federal Deposit Insurance Corporation, or FDIC). For example, these funds may hold government bonds, municipal bonds, corporate bonds, cash and cash equivalents.
A money market account is essentially a type of high-yield savings account and it’s FDIC insured up to $250,000.
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Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.60% APY on your cash!
How Does a Money Market Within Your IRA Work?
If you are starting a retirement fund that has a money market component to it, you’ll want to make sure that you understand how these money market accounts work. One major way they differ from regular money market accounts is that they are governed by a retirement plan agreement.
This can place some limits on what you can do with the money. Typically, that will mean that you can’t withdraw the money until you have reached a certain age. But one advantage is that the money in the account will grow tax-free or tax-deferred (depending on what type of retirement account it is in).
For example, a money market account in a Roth IRA would follow different rules than money in a traditional IRA.
• You can deduct contributions to a traditional IRA, but a Roth IRA is funded with after-tax money.
• You can’t withdraw money from a traditional IRA until you’re 59 ½, except under special circumstances.
• Because contributions to a Roth are post tax, you can withdraw your contributions at any time (but not the earnings).
Advantages of a Money Market Account Held Within a Retirement Account
• Since these accounts are held at a bank, they are insured by the FDIC up to $250,000. By contrast, money held in a brokerage account is not FDIC-insured.
• The money market component can be used to store proceeds of the sales of stocks, bonds, or other investments.
• Many money market accounts offer the ability to write checks against the account (just keep in mind that withdrawals are subject to restrictions).
Disadvantages of a Money Market Account Held Within a Retirement Account
• Money market accounts offer a relatively low rate of return compared to what you might be able to earn in the market over time.
• Opening this type of money market account requires opening a retirement account.
• You may not be able to withdraw money until retirement age without paying a penalty.
Money Market Account Within a Retirement Account vs Traditional Money Market Account
The biggest difference between a money market account that is a component of a retirement account vs. a traditional money market account is where they are held. Unlike a regular money market account, the money market component is held inside a retirement account, such as a 401(k) or IRA account.
While you can generally access money in a traditional money market account at any time, early withdrawal from a money market that is part of a retirement account can trigger taxes and penalties.
Recommended: What is an IRA and How Does it Work?
What Should I Know About Money Market Accounts Held Within IRAs?
If you are wondering how to save for retirement, there are a few things to keep in mind before opening a retirement account with a money market component.
The most important is that money put into the money market component is subject to the same conditions as any other money you invest into a retirement account. You generally will not be able to access it without penalty until you retire.
You’ll also want to bear in mind that these are low-risk, generally low-return accounts. The money that you deposit, or money that is automatically transferred, is not going to provide much growth.
In some cases, when you open a retirement account, the funds will be automatically deposited in the money market component. In these instances, be sure to check that the money in that part of your account is then used to purchase the securities you want. Given the relatively low yield of an MMA, you may only want a certain portion of your savings to remain there.
Opening a Money Market Account That Is Part of an IRA
If you want to put some of your retirement savings in a money market account, you likely won’t be able to open the account separately, as you can with a traditional MMA.
Instead, you would open a retirement account with your bank, brokerage firm, or company provider. Depending on your IRA custodian, they may automatically include a retirement money market account as an investment option inside your IRA account.
Does It Make Sense to Put Retirement Funds in a Money Market?
There are many different types of retirement plans, so you’ll want to make sure to choose the options that make the most sense for you. While it might make sense to put some money into the money market component of your 401(k) or IRA, you might not want to put much money in it.
The reason for this is due to the relatively low interest rate that money market accounts pay. In some cases, the interest rate may be lower than the rate of inflation. If so, the money kept in the money market component will lose purchasing power over time.
The one exception to this rule would be retirees who are currently living off of the money in their retirement accounts. These investors already in retirement will often want to keep some of their money in money market accounts so they have to worry less about market volatility.
Alternatives to Money Market Accounts Held Within Retirement Accounts
There are any number of low-risk alternatives to money market accounts within retirement accounts, including vehicles outside a retirement account, such as a high-yield savings account. For similar alternatives within a retirement account, you could consider investing in bonds, bond funds, and other lower risk investment options.
The Takeaway
A money market account is often a component of a retirement account, such as an IRA or 401(k). This type of account has the advantages of being FDIC-insured and fairly liquid. However, it may not earn enough interest to outpace inflation. Many investors will want to keep the money in their retirement accounts in investments that can provide higher rates of return. That said, one advantage to keeping some of your retirement funds in a money market is that it can become part of the low-risk, cash/cash equivalents portion of your portfolio.
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FAQ
Can you keep some of your retirement funds in a money market account?
Yes, some retirement accounts offer a money market component. To keep some of your retirement savings in a money market account, you’ll need to open up an individual retirement account (IRA), 401(k), or other type of retirement account. Many retirement account custodians will include a money market account as one “investment“ option for your account.
What is the difference between an IRA and a money market account?
A standard money market account is similar to a regular savings account. An Individual Retirement Account (IRA) is an account that allows you to save for retirement with tax-free growth or on a tax-deferred basis. An IRA account can be used to invest in a variety of different ways. Many IRAs will have a money market component to them.
What is the difference between a money market account and a 401(k)?
A money market account is similar to a savings account in that the money is liquid and earns interest. A 401(k) is a special tax-advantaged account designed to help people prepare for retirement.
With a 401(k), contributions are typically tax-deductible and the money grows tax-deferred until retirement. By contrast, a money market account is funded with after-tax dollars, and there are no tax benefits associated with these accounts. The only exception is if the money market account is a component of a retirement account. In that case, it is governed by the rules of the retirement account it’s in.
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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
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.
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.
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.
A confirmed letter of credit can be an important document to those who are launching or running a business, particularly those engaging in international trade. These letters are used to help protect both the buyer and the seller in a business-to-business transaction by adding an extra guarantee that the seller will get paid. They essentially mean that a second bank will pay the seller if the first bank fails to do so, which can inspire confidence and allow a deal to go through.
Here’s a closer look at what a confirmed letter of credit is, how it works, and its pros and cons.
What Is a Confirmed Letter of Credit?
Also known as a confirmed LC, a confirmed letter of credit is an additional guarantee for a payment by a secondary bank. It states that this additional bank will be responsible for a payment being on time and in full even if the buyer doesn’t meet their contractual obligations and the first bank (called the issuing bank) defaults on the payment. You might think of it as a kind of insurance policy or Plan B if the initial bank responsible for payment fails to do its job.
This type of document can be common in international trades, such as transactions between export and import businesses. In many cases, a guarantee may be required to conduct international transactions or when a vendor or seller has reason to doubt the first bank’s creditworthiness.
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How Confirmed Letters of Credit Work
Confirmed letters of credit are commonly used as negotiable instruments, which are signed documents that promise to pay a certain sum to a specified person. They can be especially valuable in international business transactions that involve a significant payment amount for goods or services. Since the letter acts as guaranteed payment, it may take the place of a request for advance payment.
To get a regular letter of credit, the buyer will likely need to submit required documents to the first bank, including proof that certain steps have been completed. Then the bank will send appropriate documents to the seller’s bank. This paperwork shares detailed instructions on the terms and conditions, as well as how payment should be made. Depending on the agreement between the buyer and the seller, payment may be made immediately or at an agreed-upon date.
Once the letter of credit has been issued, the buyer may need the backing of a second bank, or a confirmed letter of credit. Worth noting: A fee is likely to be involved. The exact amount of this fee may depend on how good (or questionable) the first bank’s credit is. This letter usually reflects the first letter of credit and uses the same terms.
A confirmed letter of credit can protect both parties because it decreases the risk of default for the vendor or seller. Additionally, it ensures that payment is only made if all the terms are met. It can be a step to building good credit when doing a deal with a new client. It can also be helpful for a business that is just starting out and making connections, building contacts, and monitoring its credit.
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Parties Involved in a Confirmed Letter of Credit
Here’s a listing of all the parties typically involved in a confirmed letter of credit.
• Buyer or applicant: This is the party who is requesting the letter of credit and who will pay the seller.
• Beneficiary or seller: The party who is selling goods or services and is the one who receives payment.
• Issuing bank: This is usually a bank where the buyer already has a business bank account. It’s the one that issues the original letter of credit.
• Confirming bank: This is the second bank that will guarantee the funds to the seller once the terms in the letter of credit are met. In some cases, the confirming bank is from the seller’s home country (this may be called a correspondent bank) or is a bank the seller already works with.
Recommended: Guide to Irrevocable Letters of Credit (ILOC)
Confirmed Letter of Credit Example
Let’s look at a fictional example of how a confirmed letter of credit could work. Say that Pauline’s Paper Goods receives an order for 100,000 pallets of customized notebooks from JessCo, a stationery company. Pauline’s Paper Goods has never worked with JessCo before and isn’t sure that this company has the means to pay for the goods. Maybe Pauline’s Paper Goods worries that JessCo doesn’t have what is considered good credit.
In order to prevent non-payment after the notebooks are produced and shipped off to the buyer, Pauline’s Paper Goods outlines an agreement that JessCo needs to pay with a confirmed letter of credit on the date the shipment leaves their warehouse.
If JessCo agrees, it would start applying for a letter of credit at its bank, where it has its checking account, in the U.S. If the bank requires it, the company needs to provide proof it has the funds available or it will apply for financing.
As soon as the issuing bank creates the letter of credit, JessCo then applies for a confirmed letter of credit with another bank, possibly the seller’s bank. When Pauline’s Paper Goods receives the completed confirmed letter, it manufactures and ships the customized notebooks. Once Pauline’s Paper Goods provides proof of when and how the goods were shipped, the guaranteed funds are released.
Recommended: Business vs Personal Checking Account: What’s the Difference?
Confirmed vs Unconfirmed Letters of Credit
If you are conducting international business, you will probably hear the terms confirmed and unconfirmed letters of credit. An unconfirmed letter of credit is simply a letter of credit issued by a bank. A confirmed letter of credit, as we’ve described above, is backed by two banks. This can foster trust if, say, there’s reason to worry the payment won’t be made.
Here’s a look at some other differences between a confirmed vs. an unconfirmed letter or credit.
• Guaranteed payment: With a letter of credit, the issuing bank guarantees payment. With a confirmed letter of credit, however, two banks confirm payment.
• Cost: Unconfirmed letters of credit tend to cost less than confirmed letters of credit.
• Changes: The buyer is allowed to make changes to an unconfirmed letter of credit. With a confirmed letter of credit, both banks can modify the document.
• Issuance: The seller only has to approach one bank for an unconfirmed letter of credit, but needs to contact two with a confirmed letter of credit.
Recommended: Guide to a Commercial Letter of Credit
Advantages of Confirmed Letters of Credit
Confirmed letters of credit can have several benefits for sellers, particularly those doing business internationally and wanting to ensure smooth transactions. These advantages include:
• Protection for both the buyer and seller
• An extra layer of confidence for the seller
• A lower risk of default thanks to a reputable second bank (perhaps serving as a guarantor if the first bank has a low credit rating)
• Buyers can seem more creditworthy, which may increase the odds that a seller will do business with them
Disadvantages of Confirmed Letters of Credit
While confirmed letters of credit can be very valuable in business, there are a couple of downsides to recognize. Disadvantages of confirmed letters of credit include:
• It may take longer to get a confirmed letter of credit since an additional bank is involved
• Bank fees may be higher than with an unconfirmed letter of credit
The Takeaway
A confirmed letter of credit can be a valuable business tool, especially when conducting international business. For those importing or exporting, the letter will guarantee payment for goods a company is supplying if the buyer and the buyer’s bank can’t complete the deal. Getting a confirmed letter of credit may cost more and take longer compared to an unconfirmed letter of credit, but the effort may be worth it. It can secure a transaction and open doors to doing business with new customers in a way that communicates confidence.
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FAQ
What is an unconfirmed letter of credit?
An unconfirmed letter of credit is a letter of credit that’s only been issued by one bank, known as the issuing bank. In a transaction, the buyer requests an unconfirmed letter of credit to guarantee funds will be paid on time to the seller by the bank.
Is an unconfirmed LC safe?
Yes, an unconfirmed letter of credit is safe because there is a guarantee or confirmation from one bank that payment will be made. Assuming that the issuing bank has a high credit rating, the seller can feel confident that the funds will be paid once all the conditions in the contract have been met. If the seller wants an additional layer of security, they may request a confirmed letter of credit — which means a second bank will provide payment if the first one fails to do so.
What is the risk of an unconfirmed LC?
The risk of an unconfirmed letter of credit is that the issuing bank won’t have the funds to pay the seller. That means that even if the seller completes their end of the contract, they risk losing out on funds if the issuing bank doesn’t fulfill their promise.
SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
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.
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.
ACH return codes are generated when an ACH (Automated Clearing House) payment fails to process and therefore gets returned. ACH payments, which essentially transfer funds between financial institutions, can be a huge convenience. They allow you to set up automatic monthly bill pay and receive direct deposit of one’s paycheck, for instance. There are, however, likely to be times when a transaction doesn’t work as expected, perhaps due to incorrect coding or insufficient funds. ACH return codes indicate exactly what went wrong.
Here, you’ll learn about what ACH return codes are and what steps you can take to help complete this kind of banking transaction, especially if you are managing a business that relies upon them.
What Are ACH Return Codes?
First, know that ACH refers to the Automated Clearing House, a U.S. financial network that provides electronic transfers among banks and credit unions. If you receive your paycheck by direct deposit or set up bill pay from your checking account, you are using the ACH system. It’s considered a fast, secure, and simple way to move money.
ACH returns occur when an ACH payment can’t be completed.
There are a few reasons why these transactions aren’t successful, including:
• The originator (the entity who requested payment) provided inaccurate or incomplete payment information or data.
• The originator isn’t authorized to debit the client’s account with an ACH payment.
• There aren’t sufficient funds to complete the transaction.
The ACH return code alerts the parties involved so they know there’s an issue, whether a recurring automatic bill pay suddenly stopped or a one-time payment could not go through. The specific reason can then help the situation be remedied so the payment can hopefully be sent again properly.
Here’s an example to clarify this concept: Perhaps your wifi provider is authorized to withdraw payment monthly from your checking account. If the Originating Depository Financial Institution (ODFI; the wifi provider’s bank) or the Receiving Depository Financial Institution (RDFI; the entity receiving the payment request; aka your bank) isn’t able to transfer funds, a return code will be generated to explain exactly why the transaction wasn’t completed.
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How ACH Returns Work
If an ACH payment can’t be completed, as mentioned above, a specific return code will be generated. The person or business originating the payment request can then work to resolve the issue.
A few details to note about how ACH returns work:
• If an ACH return occurs due to insufficient funds, the consumer may be on the hook for an ACH return charge. It’s similar to when a check bounces; the end user pays a small fee; in this case, usually $2 to $5.
• Timing-wise, most ACH returns only take about two banking days, though a few of these ACH codes involve transactions that can take up to 60 days to process.
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Common ACH Return Codes
There are 85 distinct ACH return codes. Here, you’ll learn about some of the most common ones. These return codes are typically received by the entity requesting payment and their bank.
Code: R01 Meaning: Insufficient funds (the account’s available balance isn’t sufficient to cover the funds transfer, similar to being in overdraft) What to do: The entity requesting payment can attempt the transaction again as a new transaction within 30 days of the original authorization date (up to two times), or contact the customer for an alternate payment method.
Code: R02 Meaning: Account closed (a once-active account has been closed). What to do: The entity requesting payment can ask the customer to correct their account information or provide a different bank account or form of payment to complete the transaction.
Code: R03 Meaning: No account exists or unable to locate account (even though the account number structure is valid, it doesn’t pass the check digit validation). What to do: The request’s originator should contact the customer to confirm their routing number, bank account number, and the name on the bank account. If this information differs from what was originally entered, they can submit a new payment with these new details. Or request another form of payment.
Code: R04 Meaning: Invalid account number. What to do: The entity requesting payment should check the account number, and retry the transaction. Or obtain the correct bank account number and submit a new payment with that account number.
Code: R05 Meaning: This transaction should have been processed as a consumer, not corporate, transaction. What to do: The request’s originator should check that you have used the right codes. They can contact the customer and ask for a new form of payment. In some cases, they may need to file an appeal with Nacha (the non-profit organization that manages the ACH network) for this kind of returned transaction.
Code: R06 Meaning: Returned at ODFI’s request (ODFI requested that the RDFI return the ACH entry), often because the transaction is believed to be fraudulent. What to do: The entity seeking payment should contact the ODFI to understand why the transaction was rejected, and then, depending on the response, resubmit or alter the request.
Code: R07 Meaning: The previous authorization for an ACH transaction was revoked by the customer. What to do: The originator of the request should suspend recurring payment schedules entered for this specific bank account to prevent additional transactions from being returned. Then they need to address the issue with the customer, and try to resolve the issue by getting a new form of payment or asking to debit a different bank account.
Code: R08 Meaning: The customer has issued a stop payment on the item. What to do: The entity requesting funds should contact the customer to resolve the issue, and then re-enter the returned transaction again with proper authorization from the customer. Or request a new form of payment.
Code: R09 Meaning: Due to uncollected funds, the originator can’t access enough money to cover the transaction. What to do: The originator should try the transaction again, and re-enter it as a new one within 30 days of the original authorization date (up to two times in 60 days).
Code: R10 Meaning: The customer advised this transaction is not authorized or is improper in some way. What to do: The entity requesting payment should check the details and authorization on the transaction to determine if an error was made. They can connect with the customer to determine why this code was triggered. If the details can be rectified, they can resubmit the transaction per ACH guidelines.
Code: R11 Meaning: An electronic check deposit was not executed correctly. What to do: The originator of the request can correct the underlying error and resubmit the corrected electronic deposit within 60 calendar days.
Code: R12 Meaning: The branch where the account is held was sold to another DFI (development financial institution). What to do: The entity making the request should obtain the customer’s new routing and bank account information, and submit a new transaction.
Recommended: What is Liquid Net Worth
More ACH Return Codes
The following ACH return codes are less common than those mentioned previously, but still occur and are worth knowing. Here’s a look at what makes these codes tick:
Code: R13 Meaning: Invalid routing number provided. What to do: The request’s originator should get the correct routing number from the customer to use when resubmitting the request.
Code: R14 Meaning: The account was being managed by someone who is now deceased or can no longer continue overseeing the account (such as an account held for a minor or an incapacitated person). What to do: This is handled on a case-by-case basis; the request’s originator might try to contact the beneficiary or new representative for the account.
Code: R15 Meaning: Beneficiary or account holder is deceased. What to do: No further action can typically be taken.
Code: R16 Meaning: Account is frozen and funds are unavailable. What to do: The entity making the request should obtain a new payment form.
Code: R17 Meaning: Known as a “file record edit criteria” code, this indicates that there is a discrepancy in the file code, and the transaction cannot be processed. What to do: The fields causing the processing error need to be identified (typically by the originator of the request) in the addenda record information field of the return to complete the transaction.
Code: R20 Meaning: The receiving account is not a transaction account (aka, it’s an account against which transactions are prohibited or limited). What to do: The entity making the request can contact the customer, and request either the authorization to charge a different bank account or a new form of payment.
Code: R21 Meaning: The ACH file contains an invalid or incorrect company identification number. What to do: The originator of the request should double-check their information, or contact the company to obtain the correct information.
Code: R22 Meaning: The individual ID number is invalid. What to do: The entity making the request should check their information and resubmit, or contact the customer to obtain the correct information.
Code: R23 Meaning: The account holder or their bank is refusing to accept the transaction. What to do: The originator of the request can work with the customer to clear up the issue, or ask them to contact their bank to resolve it.
Code: R24 Meaning: Duplicate entry. What to do: If the transaction is indeed a duplicate, there’s nothing else to do. If it isn’t, the entity making the request can contact their customer or their customer’s bank to resolve the error.
Code: R29 Meaning: The customer has notified their bank that the requesting entity is not authorized to conduct this transaction. What to do: The originator of the request should suspend recurring payment schedules, and then address the issue with the customer. For instance, they could request new payment information from the customer or ask them to contact their bank to authorize the payment.
Code: R31 Meaning: This indicates that the receiving bank is requesting to return a certain kind of ACH transaction (a CCD, or cash concentration disbursement, and CTX, or corporate trade exchange, only). What to do: The entity making the request can reach out to their customer to resolve this issue or request a different form of payment.
Code: R33 Meaning: There is an issue with a transaction involving a converted check (known as XCK), such as when a damaged paper check is converted to an electronic version. What to do: The originator of the request should contact their customer for another payment form.
Recommended: Average Savings by Age
The Takeaway
ACH return codes express the reason why an electronic Automated Clearing House payment could not be completed. Knowing what each code represents can help determine what the next steps should be to keep payments flowing smoothly or get refunds completed.
Need an easy way to receive payments when managing your personal banking?
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.
FAQ
What causes an ACH return?
ACH returns occur when an Automated Clearing House payment can’t be completed, perhaps due to inaccurate or incomplete information or insufficient funds. When this happens, an ACH return code is generated, providing a reason for the return.
What is ACH return fee?
When ACH returns occur, especially due to insufficient funds, a fee can be charged. It’s similar to how a bounced check incurs a fee. The amount is generally around $2 to $5.
How long does an ACH refund take?
Typically, an ACH refund takes about five to 10 banking days to occur, though some situations can take longer to resolve..
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
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