SoFi is an online personal finance company that offers a wide range of solutions, including student loans, personal loans, mortgages, credit card, banking and investment. SoFi is not a bank and does not have any physical branch. Instead, it has partnered with key banking players and relies on them to offers its banking services. SoFi has more than $50 billion in funded loans and more than 18 million members using its services. While SoFi offers a somewhat lower APY than its counterparts, most of the services, including overdrafts, are fee-free.
- Cashback rewards
- 55,000+ fee-free ATMs
- $1.5 million insured
Let us have a look at the different types of accounts offered, the key features of each account and the benefits of having an account with SoFi.
Bank Account Types
SoFi mainly offers the following accounts:
|Account Type||Key Features|
|SoFi Money||· 0.25% APY
· Fee-free overdraft
· $500 minimum to earn APY
|SoFi Credit Card||· 12.99% to 24.99% APR
· 2% cashback
· No annual fees
|SoFi Relay||· Connect accounts
· Track spending
· Monitor credit score
SoFi Money Review
SoFi Money is a cash management account that allows account holders to deposit, spend and save money. Instead of offering a separate solution for saving and checking needs, SoFi Money is offered as a hybrid solution to both problems.
SoFi Money Account is powered by the mobile application and comes with a Mastercard debit card. While there is no minimum balance requirement to open a SoFi Money Account, you need to have recurring monthly deposits of at least $500 per month to earn the APY of 0.25%. The interest is accumulated on daily basis and compounded on monthly basis. It is deposited by 5th business day after the end of a particular month.
The account can be opened online and accessed anywhere from the mobile application or the desktop solution. SoFi Money Account is remarkable in the sense that no fees are charged for offering the services. There is no fee for account opening, overdraft, account maintenance, minimum balance, ATM usage, card replacement, bill payment, POS transaction or dormant account.
SoFi offers state-of-the-art security, including FDIC insurance of amounts up to $1,500,000. This means your funds are kept in a secure vault where only you can decide whether and when to spend them. The fraud policy of SoFi is strict, and you can instantly freeze your card from the mobile app.
SoFi offers joint accounts, and you can easily add a joint account holder to your account from the mobile app. The banking services are, however, currently limited to individuals and not offered to businesses.
SoFi Credit Card Review
SoFi Credit Card is designed to help customers save, invest and pay down their debts. The APR currently varies between 12.99% to 24.99%. The APR for cash advances can be as high as 26.99%. SoFi encourages the consumers to pay off their credit balance on time by offering an unparalleled incentive; if you make 12 on-time payments, you can reduce your APR by 1%.
There is no annual fee for using the card, but the balance transfer and cash advance fees are greater than $10 or 5% of the transaction value. In addition, the late payment and return payment fees can be as high as $39. SoFi offers 2% unlimited cash back on all the qualifying purchases, and you can use redeem it to pay down the debt, invest or save with SoFi.
Unlike some of its competitors, applying for a credit card through SoFi results in a hard credit check, which may adversely impact one’s credit score. Therefore, availing of a SoFi credit card may not be your best option, in case you are looking to improve your credit history.
SoFi Relay Review
SoFi Relay is not a bank account, but a banking solution to help you integrate all the accounts and track your money in real-time. This means you can understand your spending habits, get financial insights and monitor your credit scores.
You can use SoFi Relay to stay updated about the credit score changes and factors that may or may not affect your credit score. Checking the score is free and does not affect your score as it only results in a soft check.
What is SoFi Account Best For?
SoFi is best if you can set aside a recurring amount for savings, and prefer to have a single instead of two separate savings and checking accounts. It is also recommended for users tired of bearing excessive bank fees, as SoFi does not charge any fee for offering the majority of its services. The APY, however, is on the lower side, making SoFi a less-attractive choice for those looking to maximize their interest income. A high insurance value of up to $1,500,000 means that you can stop worrying about your funds.
SoFi prevents you from overdrawing your account in most cases. This is done by rejecting the transaction if the amount is higher than the current balance. However, in some cases, the transaction amount can be higher than the available balance, resulting in an overdrawn account. In this case, SoFi deducts the additional value from the next credit and does not charge you any overdraft fees.
Beginning March 2021, overdraft coverage can be set up by members who receive at least $1,000 in monthly direct deposits, and the maximum coverage is $50.
Opening an Account at SoFi
Anyone in the US with a valid Social Security Number (SSN) can open a SoFi account. The application can be completed online in almost 60 seconds, and you need to provide key personal details, such as full name, address, date of birth, citizenship status, SSN, and contact details to open an account. SoFi may request additional information, such as a photo ID or driver’s license in some instances. Once approved, the debit card is mailed within 5 to 7 business days and you can start using your account.
Pros and Cons of SoFi
|1||SoFi allows you to keep your checking and saving in one account, and earn APY on the combined account, making it a unique feature in online banking.||The APY of 0.25% is relatively low compared to what is offered by SoFi’s competitors. You can earn as high as 0.55% on the Alliant savings account and as much as 0.50% on the Chime savings account.|
|2||The cashback rewards offered by SoFi are highly attractive, making it suitable for users who spend a lot. When combined with the APY, you effectively earn more than what is offered by most online banks.||The minimum requirement of $500 in recurring deposits is indeed discouraging for those looking to earn interest. Many of the online banks allow you to earn interest on a very low starting balance, which means you can accumulate funds based on your own pace.|
|3||SoFi offers most of its services, including an overdraft facility, free of charge. This makes it a very viable option in case you are fed up with the hidden charges and looking to minimize your banking fees.||The range of banking services offered by SoFi is fairly limited. There is no solution for those looking to keep a separate checking and savings account. Similarly, there is no credit card solution for frequent spenders, and there is no facility for opening a teenager or child savings account. Lastly, the lack of physical branches means that you cannot deposit cash.|
Comparison with Similar Banks
The two other online banks include Chime and Alliant. Here’s how SoFi stands in comparison with these two:
|Link to review||Link to review||Link to review|
|APY: Up to 0.25%||APY: Up to 0.50%||APY: Up to 0.55% (TD Beyond Savings)|
|Minimum balance: $500||Minimum balance: $0||Minimum balance: $100|
Disclaimer: The APY, as well as the fees, offered by SoFi, is variable and can be changed anytime. It is connected to the Federal Funds Rate, which may be subject to change. Although you can get started without a minimum balance, you need at least $500 in recurring deposits to qualify for the 0.25%, in the absence of which you only earn an APY of 0.01%. The fee-free overdraft coverage of up to $50 has been recently launched and may not apply on the previous transactions. It is particularly important to note that FDIC insurance is only provided after the funds arrive at the Program Bank, which may take up to two days. SoFi does not reimburse any out of network ATM fees, which is why you need to carefully consider the availability of its ATMs in your preferred region. Foreign transactions are subject to a 0.9% foreign convenience fee and an additional 0.2% conversion fees, which is not reimbursed by SoFi.