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.
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:
- Pay zero account fees.
- Earn more interest.
- 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.
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!
that is concerning.
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.
Have you called them? What was their reply
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.
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.
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.
How many days does it take sofi to deliver an ATM card
I don’t remember the exact length of time but it was about a week I believe.
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.
I was able to open and account, but then found out they don’t offer joint accounts. Made it a non-starter for me
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.
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.
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?
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.
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.
It’s past 9 working days now and i haven’t gotten my sofi debit card. What exactly is wrong?