Sofi Money Review
High-yield savings are a fantastic way to stash your free money wasting away in your checking account. This Sofi Money Review will go over the pros and cons of opening an account with Sofi Money.
You typically earn an average of 2.20 % APY or more dependent on which savings account you pick.
One of the problems with keeping cash in your low-interest bank savings account is inflation.
According to the balance, in 2016, inflate was at 2.1%, in 2019, inflation is at 1.8%. Keeping money in your current savings account that generating 0.1% will not beat the current inflation rate.
With high-yield savings, you’re able to beat the current inflation and earn a good amount in passive income. Sounds good? Let’s dive into my thought process for picking the right high-yield savings account.
Here are my top choices:
Marcus from Goldman Sachs
- 2.25 % interest rate
- No minimum deposit
- No transaction fees or monthly fees
- You are limited to six withdrawals or transfers per month
- Does not offer a checking account
- No ATMs
- Limited Branch Banks
- No mobile app
- Mobile check deposit
Ally Online Savings
- 2.2% interest rate
- No fees or minimum required balance
- FDIC insurance up to $250,000
- Access 43,000 ATMs through Allpoint network
- 24/7 customer service
- Free transfer between checking and saving accounts
- Limited to six withdrawals or transfers
- No physical branches
- Cannot deposit cash
- $10 per limit reimbursement for ATM fees
- $25 over-draft fees
- 1% foreign transaction fee
Looking at both the advantages and disadvantages, I was ready to go with Ally, despite it’s lower interest rates compared to Marcus. I also read really good reviews for Ally from the internet.
Enter Sofi Money.
Sofi Money is a hybrid checking and savings account. Unlike Ally, you can send money via debit cards or even write a check if you’d like.
- No Fees: When they mean no fees, they really mean it. You don’t pay monthly fees, overdraft fees, or ATM fees (including ATMs abroad).
- SoFi will reimburse you for third-party ATM fees.
2,25%2.00% APY as of 7/31/2019
- Peer to peer transfer
- Exclusive Sofi member benefits
- Up to $1.5 million in total FDIC*
Money kept in Sofi is distributed to six affiliated banks. Each of those banks has the traditional $250,000 FDIC. Technically though, Sofi Money is offered under Sofi Securities LLC and falls under the FINRA/SIPC rules.
Under this rule according to The Motley Fool, investors are protected under for up to $500,000 under certain conditions, mostly having to do with securities or cash for the purpose of a securities transaction.
Member benefits include career coaching, local networking events, and an entrepreneur accelerator. Read a real-world example of Sofi member benefit from Financial Panther’s here.
- Max withdrawal of $610 from an ATM in a day
- $250 worth of peer-to-peer transfers in a day
- No wire transfer
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Since I was already a member with Sofi through its Student Loans Refinancing program, setting up a Sofi Money account was easy and fast.
A high-yield savings account is an ideal vehicle to store your excess money due to its typically high-interest rates.
For example, my bank Wells Fargo is currently offering a 0.1% interest. I don’t have to do the math to know that this rate is abysmal. There is another savings account through the same bank with a slightly higher rate of 0.25%, which is not that much better.
This type is savings is ideal for numerous goals you might have.
- Emergency fund
- Expensive vacation fund
- Saving for mortgage
- Other future funds
Versus a certificate of deposit (CD), high-yield savings offer a slightly lower interest rate but with much more flexibility. According to Investopedia, CDs are a time deposit that has terms ranging from one to five years, with the longer terms offering higher interests. The downside to CDs is that depositors cannot withdraw the funds until the CD is matured.
Let’s go back to my current savings account versus Sofi Money. For example, if I were to deposit $10,000 into my savings account at an interest rate of 0.10%, in one year, I’d get $1,010. That’s a gain of $10 dollars.
If I put the same amount of $10,000 into the Sofi Money account at a 2.25% interest rate. After one year, I’d get $10,227.54 dollars. That’s a gain of $227 dollars. $10 versus $227 dollars give us 22 times fold increase in savings.
While $225 isn’t much to write home about, I’d take that over $25 any day.
Let’s try another example. If I were to automatically transfer $200 per month into a savings account of one offering daily interest of 0.1, the other offering 2.25%, this is what I’d get.
At 0.1%, I’d get $2,401.20
At 2.25%, I’d get $2,427.13
Once again, I’d rather take a higher interest in addition to protecting myself from inflation while earning passive income.
In my opinion, this is probably one of the easiest and safest way to earn passive income for a pharmacist! Not only am I earning passive income, but I am also diversifying my investment portfolio that is in line with my investment and savings strategy.
Of note, I am a current user of both Mint and Personal Capital. I linked my Sofi Money to both apps, it looks like Sofi is taking extra precaution when it comes to security. Sofi Money currently requires a two-step authentication in order to sync. This can be annoying at times but I get why they wanted to have this security feature.
I wanted to automatic transfer a set amount of money every month to my new savings account. However, I have yet to find a way to do so. I did link my main checking account to Sofi. I guess for now I have to manually transfer money.
They do, however, offer direct deposit, if it’s something you’re interested in.
The high-yield savings account offers great APY currently, averaging more than 2.20% and goes up from there. With the proliferation of online banking such as Ally, there is fierce competition for your money.
You can’t really go wrong by choosing plans. The best thing is to look at the pros and cons of each plan, check current rates and see which one fits your needs the most.
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