Savings

SoFi Increases APY of Savings and Checking Accounts to 1.8% for Direct Deposit Members

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SoFi

SoFi announced on Tuesday that it was increasing the annual percentage yield (APY) of its checking and savings account for direct deposit members by 30 basis points (or 0.30%). The new APY of 1.80% is well above the national average of 0.10%. For members not using direct deposit, the APY on accounts is 1.00%.

In addition to the increased interest rates, SoFi is offering new members a time-limited sign-up bonus.

New members will receive up to $300 when they create an account and set up direct deposit. Existing members who have not set up direct deposit can qualify for the bonus by adding it to their account. The offer will be available until September 30.

SoFi is also offering new banking customers who set up direct deposit – or existing customers who activate direct deposit – up to 3% cash back with the SoFi credit card for one year. Existing customers who activate direct deposit will need to keep it for the year in order to continue to benefit from the 3% rate.

“Inflation has hit people’s wallets hard,” SoFi CEO Anthony Noto said in the press release. “By increasing our APY for direct deposit members to 60 times the national average, we’re helping more people get their money’s worth and putting more money in their pockets than ever before.”

And SoFi isn’t the only option for a high-yield savings account. Varo Bank offers consumers a potential APY of 5%, M1 offers a checking account with a recently increased APY of 1.70%, Marcus from Goldman Sachs offers an account with an APY of 1.20% and American Express has an account with an APY of 1.00%.

Also: The 5 Best High Yield Savings Accounts: Not Your Standard Savings

The increase in the APY follows the Fed raising interest rates in an effort to keep inflation under control. Inflation hit 9.1% last month, a four-decade high.

According consumer price index summaryfor the year ended June, the cost of food increased by 10.4%, that of gasoline by 59.9% and that of energy by 41.6%.

The Fed is expected to raise interest rates a third time at the end of July, possibly another 75 basis points, or 0.75%, and then again in September. As such, the APY on savings accounts will also increase.

However, an increase in federal interest rates also means that the annual percentage rate (APR) for credit cards, mortgages, personal loans and other credit products will also increase. This means that now is a good time to pay off credit card balances to avoid being hit with higher interest charges if you have a monthly balance.

Placing money in a high-yield bank account is a good way to generate passive income in the face of rising living costs. Credit cards that earn rewards for necessary purchases, like gas and groceries, can also be a great way to cut back on the expenses you have to make.

Consumers could also consider putting any excess cash into an investment platform to generate more passive income. There are a number of options – including SoFi – that can automate investing, lowering the entry bar. Other options include M1, Marcus Invest from Goldman Sachs or Wells Fargo.