Is SoFi Money the Bank Account of the Future?

I signed up to the SoFi Money waiting list soon after they opened it back in June of last year. I learned earlier this month that I was now off the list and ready to open an account. So I did (you can get started with $50 by opening an account through this affiliate link).

I have had a relationship with a top 10 bank for more than 26 years. Actually, that is not completely accurate. This large bank bought the mid-sized regional bank, where I had opened an account in 1993, about 20 years ago and hence I became a customer by default. They provide an adequate experience but nothing differentiates their offerings from the other large banks. If it was easy to switch banks I would have done so years ago, so they have maintained my business not out of loyalty but out of inertia. I know I am not alone in this.

Anyway, back to SoFi Money. It is not truly a SoFi bank account because SoFi is not a bank. They are able to offer bank-like services because of a partnership they have with WSFS Bank, a Delaware based bank with a history dating back to 1832. SoFi and WSFS Bank first announced their partnership in December 2017.

There are three main benefits that SoFi touts with the SoFi Money account:

  1. Pay zero account fees.
  2. Earn more interest.
  3. Free ATMs everywhere.

What appealed to me most was the interest. SoFi will pay (as of this writing) 2.25% on balances held in a SoFi Money account. Note about the small print: you will only earn this 2.25% for the first three months and then the interest rate drops to a (still respectable) 1.25% unless you do one of two things. Either setup a salary direct deposit of $3,000 or more a month or do $500 in debit card transactions each month. I am in the process of moving my salary deposit to my SoFi Money account.

I typically average more than $10,000 in my checking account and so it will be nice to earn a little interest on that money. Also, a few years ago my current bank tried to charge me $7 a month for the privilege of having a checking account with them. When I called to complain they agreed to credit my account but I still see the charge and corresponding credit each month and that irks me. Oh, and it pays exactly 0% interest.

One interesting piece I noticed when reading the SoFi Money fine print is around FDIC insurance. SoFi has partnerships with six banks thereby providing up to $1,500,000 of insurance for each SoFi money account:

The cash balance in SoFi Money Accounts is swept to one or more program banks where it earns a variable rate of interest and is eligible for FDIC insurance. FDIC Insurance is not provided until the funds arrive at partner bank. There are currently six banks available to accept these deposits, making customers eligible for up to $1,500,000 of FDIC insurance (six banks, $250,000 per bank).

I received my SoFi Money Visa debit card in the mail a few days ago and they have clearly gone for the high end experience here. They did not send the card in a regular #10 envelope like the typical bank does, instead it was sent in a thin black cardboard box inside some kind of durable plastic envelope. Once you open the box you remove a folded black cardboard package with the debit card inside. You can see the picture above. The packaging is vaguely reminiscent of something that Apple would do if they ever sent you a debit card.

I only activated my debit card a week ago and I have had just one ATM transaction. But so far I like the look and feel of the app and I intend to use this as my primary bank account going forward.

If you are looking for a new kind of bank account you have many options today beyond SoFi. Companies like Varo, Chime, Moven, MoneyLion, Stash and Aspiration all offer digital bank-like checking accounts. Of course, there is also Finn by Chase that launched last year and Ally, Simple and Capital One 360 that have been around for a while. This year will also likely see the entry of the European digital banks in to the market here as Revolut, N26 and Monzo have all indicated their intention to launch in the US.

I think the days of the plain vanilla checking accounts are numbered. When I read that companies like Chime have more than 2 million online checking accounts and are adding more new customers than Wells Fargo it confirms my view. We are just at the beginning of this wave but in the near future if a bank wants to attract new customers they are going to need to eliminate most fees and pay interest on checking account balances. This is good news for consumers.

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Larry Loeser
Feb. 7, 2019 7:33 pm

Peter – this one sentence in the SOFI Money report quote deserves some additional explanation by them:
“FDIC Insurance is not provided until the funds arrive at partner bank.” That implies that money transferred to the account may be uninsured for part of its journey. Understanding this is important for depositors, although many/most will see the words FDIC insured and ignore the important details.

In the worst case, if I transfer $1.5 million to my account on the day that SOFI Money files for bankruptcy, my money may become subject to general creditors and not be backed by any insurance. Hopefully, they have designed the account to eliminate this risk for depositors.

Good article!

wade13x
wade13x
Feb. 14, 2019 6:25 pm
Reply to  Larry Loeser

that is concerning.

Richard Grimsley
Richard Grimsley
Feb. 24, 2019 8:37 am
Reply to  Larry Loeser

Yes, as I read it, it seems that there is a small risk during the deposit period as the money transfers to SoFi and then moves to the partner banks. Also, what happens during the payment, transfer out process? Is it the same risk each and every transaction? I did open an account, but have not transferred money yet to the account. I’m going to call them and ask this question. I want to know the uninsured risk period for my money for each and every transaction that I make through them.

Jacob
Jacob
Mar. 10, 2019 3:15 am

Have you called them? What was their reply

ConcernedSoFiMoneyAccount
ConcernedSoFiMoneyAccount
Mar. 10, 2019 11:38 am
Reply to  Jacob

See ConcernedSoFiMoneyAccount’s comments below. I called them and they confirmed that the money is not fully insured while SoFi is transferring it to a Program Account. This could be up to 2 days while it’s in the Clearing Account and then a unknown amount of days while it’s it intermediary banks moving to the Program Account.

Richard Grimsley
Richard Grimsley
Mar. 10, 2019 5:19 pm

Because of this, thinking how often I make transactions, I decided not to use them. There are many good competitive choice available. I decided on Fidelity cash management (acts like a checking account) instead. It’s free to use, free ATM”s and earns interest.

ConcernedSoFiMoneyAccount
ConcernedSoFiMoneyAccount
Feb. 26, 2019 9:47 pm
Reply to  Larry Loeser

I read the same line in their disclosure statement and emailed their CEO because this is a red flag for me. Someone from the office of the CEO called me that day and confirmed that while you money is in transit or with SoFi directly it is not covered by SIPC and could not be fully covered by the FDIC while it is with the Clearing Bank or other account which has aggregated funds (commingled with other customers). This is not aligned with their industry peers and is very concerning. While I still have a SoFi Money account I’m no longer depositing any more money into that account due to the limited risk on what should be a no risk account.

Isiaq
Isiaq
Apr. 1, 2019 6:57 pm

How many days does it take sofi to deliver an ATM card

Nancy
Nancy
Jun. 20, 2019 8:14 pm
Reply to  Isiaq

It was about 10 days for me.

James
James
Oct. 27, 2019 1:38 am
Reply to  Larry Loeser

2. The Fidelity® Cash Management Account’s uninvested cash balance is swept to one or more program banks where it earns a variable rate of interest and is eligible for FDIC insurance. At a minimum, there are five banks available to accept these deposits, making customers eligible for nearly $1,250,000 of FDIC insurance. If the number of available banks changes, or you elect not to use, and/or have existing assets at, one or more of the available banks, the actual amount could be higher or lower. For more information on FDIC insurance coverage, please visit http://www.FDIC.gov. Customers are responsible for monitoring their total assets at each of the Program Banks to determine the extent of available FDIC insurance coverage in accordance with FDIC rules. Refer to the FDIC-Insured Cash (Core) Disclosure Statement and list of eligible Program Banks for details. The deposits at Program Banks are not covered by SIPC.

ConcernedSoFiMoneyAccount
ConcernedSoFiMoneyAccount
Dec. 7, 2019 12:52 pm
Reply to  James

From Fidelity’s Sweep Disclosure:

By investing in securities you can lose your money, including the principal amount you invested. Securities held
at Fidelity (as well as funds held at Fidelity and not at a Program Bank) are covered by the Securities Investor
Protection Corporation (SIPC). SIPC currently protects these funds and securities up to $500,000, including
$250,000 for claims for cash. SIPC coverage does not cover fluctuations in the market value of your investments.
Your Cash Balance is only eligible for FDIC insurance once it becomes a Program Deposit held by a Program
Bank. Your Cash Balance while held by Fidelity and in transit to or from a Program Bank is not FDIC-insured but is
covered by SIPC. For more information regarding FDIC insurance, please consult fdic.gov. For more information
regarding SIPC coverage, including the SIPC brochure, please consult sipc.org or call 202-371-8300.

The fact that the funds are SIPC insured while on the way to a Program Bank was the deal breaker for me. This means that my money is always covered as I will never be making a deposit greater than $250k at any point in time. Really wish SoFi would do their homework and model their account like their peers who offer coverage while the money is in transit and not group all funds into one account which that it’s not fully covered.

David McNickle
David McNickle
Feb. 8, 2019 8:30 am

Last month I received my SoFi Money invitation as well. I have experienced a similar situation where my local bank was sold to a much larger bank. Interest rates have been 0% for more than a decade now and I haven’t had a need to walk into a branch for years. The bank’s lack of interest rate adjustment while the Federal Reserve raises the target benchmark rate was the catalyst to get me interested in switching away from the large bank. Like you, I suspect we are not alone.

Tim
Tim
Feb. 10, 2019 9:44 am

I was able to open and account, but then found out they don’t offer joint accounts. Made it a non-starter for me

Laura
Laura
Feb. 12, 2019 8:45 pm
Reply to  Tim

Not offering joing accounts is definitely a drawback. However, I received notification this week that the ability to open join accounts is coming to SoFi this spring.

David
David
Feb. 15, 2019 7:14 am
Reply to  Tim

Have to agree about joint accounts. Was looking into the SoFi account, and overall looking what I see, but non-starter until they add ability for joint accounts.

Gordon
Gordon
Jul. 8, 2019 8:06 pm
Reply to  David

I use SoFi, so far I’ve had a really great experience. They have had a ton of changes over the last few months including adding joint accounts.

Richard Grimsley
Richard Grimsley
Feb. 24, 2019 9:09 am

I just thought of an additional concern about the SoFi money transfer process. Lets say you have 15k in your checking safe in the partner banks and SoFi declares bankruptcy. Now how do you get your money out without first having it transfer through and bankrupt company? Just asking in my mind here. Is that the kind of risk I want to take with my everyday bill pay money? What do you think about that guys?

Richard Grimsley
Richard Grimsley
Mar. 10, 2019 11:46 am

An update for my decision. I opened the account, but decided not to use it. There are too many other banks with quality offerings that don’t have the risks outlined above. Fidelity has a great cash management account (basically a checking account) with no fees, debit card and interest earning. There are many choices in the market.

Jacob
Jacob
Mar. 10, 2019 3:19 am

When you open a sofi money account are you added to the waiting list or have an account created as soon as possible? And how long can a person wait on the waiting list.

James robert
James robert
Apr. 4, 2019 11:08 am

It’s past 9 working days now and i haven’t gotten my sofi debit card. What exactly is wrong?

Bobby
Bobby
May. 5, 2019 9:28 am

I have 6 figures in my SoFi money account and not concerned at all, there is a lot of life in this company and i do not worry about them failing, there will always be student loans being made so its a long term thing!! The main reason i opened this account was i needed the ability to manage money between checking and wealth accounts in one app, so for that reason im staying with them! They got a solid product line and everything works as it should! People worry way too much about this stuff, the banks collapsed in 1929, and has not happened since! Lot of y’all aint been born back then!

ConcernedSoFiMoneyAccount
ConcernedSoFiMoneyAccount
May. 6, 2019 7:52 pm
Reply to  Bobby

Bobby,

Personally I’m not worried about SoFi as a company but I am worried about this product and the way it is structured. SoFi may be solvent but their partner and routing banks may not be. SoFi has gone out of its way to remove any liability for cash in their possession or in transit to the program account (just compare their disclosure statements to their peers). This is the only cash management product that I know of that aggregates all their customers money into one account before it is moved to a program account and is not fully covered by either SIPC or FDIC (up to the amount advertised)

If you have cash reserves and want to keep them at SoFi Money then that is clearly your choice but having lived thru NetBank and the other 2007-2008 banking failures I’m personally not going to place my cash at risk for what should be a zero risk product. If you are living paycheck to paycheck or don’t want to risk losing a direct deposit paycheck then this isn’t the product for you.

Shay
Shay
May. 8, 2019 11:51 am

I have $5,000 cash that I would like to deposit in my SoFi Money account. Is there a trick to doing this?

Liza Milena
Jun. 4, 2019 8:27 am
Reply to  Shay
Joe Pierce
Joe Pierce
Nov. 19, 2019 1:22 pm
Reply to  Shay

I would get a money order and them deposit that.

Asaf
Asaf
Jun. 21, 2019 12:01 am

For anyone looking for a referral link to earn $50 upon opening a new SoFi account and depositing $100 or over, here you go: https://www.sofi.com/share/money/2499931/

Peter
Peter
Oct. 27, 2019 1:07 pm
Reply to  Asaf

Hello Asaf. Considering you did the promo back in June. Please share details.
How long did it take to receive debit card?
How long before you could withdraw your initial $100 investment?
Did you ever receive your referral bonuses?

Thanks

Asaf
Asaf
Oct. 27, 2019 4:07 pm
Reply to  Peter

Hey there. It took me about a week to receive the debit card. From what I remember the bonus was paid two days after I deposited the $100 and I was able to withdraw the initial deposit at anytime after, but I never did as I still use the account to this day.

john D
Oct. 8, 2019 7:45 am

So Fi now has a Investing Promo too> Open with $100
and get $50 in Free stock. Here is a link if interested.

https://www.sofi.com/share/invest/2495626/

Thanks

midMOmike
midMOmike
Oct. 29, 2019 8:56 pm

Here’s my referral link. I think links expire after 14 days, so this one should be good through Nov 11, 2019

https://www.sofi.com/share/money/2739771/

my $50 bonus showed up about 1 day after my account was confirmed, and it took about 2 days for the small deposits to show up (they make 2 deposits of less than a dollar to make sure it’s a good bank account). I don’t think Ill keep much money in the sofi account. Just enough to cover small purchases. Maybe after a while I’ll be confident enough to keep larger amounts in it to earn at least a little bit of interest. A little bit is more than my current checking accounts pay.

John D
Oct. 30, 2019 7:29 am
Reply to  midMOmike

Hi midMOmike

Did you open the SoFi Invest account too?
Just FYI you can also do the SoFi Invest $50 Bonus
but i believe you have to use a different person’s referral link than you used for
the SoFi Money.. If you are interested my link, as above, is
https://www.sofi.com/share/invest/2495626/

The bonus for invest takes a little longer to post. (just a heads up on that)

Thanks

SBR
SBR
Nov. 13, 2019 8:11 am

Hello,

I just used the referral link form someone on another group and signed up and funded the account. There is no mention of the $50 bonus. I am curious to know if it was the same for other members and you just were provided with the bonus afterwards. Thanks a lot.

SBR
SBR
Nov. 13, 2019 8:44 am
Reply to  SBR

Hello again,

I ended up calling customer service; waiting time was not even 30 seconds before I spoke to a customer rep who said they do not not specify anything about the bonus while signing up and added that once they receive the funds i have transferred it may take 10 days to receive the bonus.

For those who are considering signing up with SoFi, please feel free to use this link and you will receive a $50 bonus.

https://www.sofi.com/share/money/2763377/

Once you receive you bonus, I will also receive a bonus of $50. After opening your account, you will also have access to a link in the app, which you can use for referrals and bonuses. Enjoy! and thank you in advance if you have used my link.

SBR
SBR
Nov. 14, 2019 8:19 am
Reply to  SBR

Just a note that I have received the bonus today, the day after i signed up, along with an email.
Best, and thanks again for using my link.

https://www.sofi.com/share/money/2763377/

Sam d
Sam d
Nov. 14, 2019 2:07 pm

SoFi Invest promotion now at $100 Bonus with $1,000 opening deposit.
Easy 10% return on your money, no risk. Please feel free to use my link.

https://www.sofi.com/share/invest/2495847/

Jerry
Jerry
Jan. 4, 2020 1:58 am

Based on my personal experience with SoFi, don’t trust them to pay the bonus they advertise. I signed up and was really liking the interface and what they had to offer, until they wouldn’t pay the bonus I signed up under. I can’t give them my money if I can’t trust them. My recommendation is that you explore some of the other options out there–there are a lot of other online banking and investing options available now. SoFi was not a good experience.

Peter
Peter
Jan. 4, 2020 6:35 pm
Reply to  Peter Renton

I will back door that and say that I received all $1400 in bonuses from them. I had no issues so far.

Asaf
Asaf
Jan. 4, 2020 7:20 pm
Reply to  Peter

Me neither. I’ve never had a problem with receiving SoFi Money or SoFi Invest bonuses.

Jerry
Jerry
Jan. 4, 2020 9:03 pm
Reply to  Asaf

Thanks for your reply. I’m glad you’re having a good experience with them. Unfortunately, I’ve also found comments from six other people who experienced the same problem I did. I liked what they offered except for the bonus issue. I’ve since also discovered that they only have a two star rating on both BBB and Consumer Affairs–I should have checked that before signing up, so that’s my fault. It’s nice that we can all post our experiences and share information so we can make informed decisions. I hope you continue to have a good relationship with them.