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In today’s diverse financial world, it’s still difficult to get your hands on cash abroad without covering currency conversion costs or paying hefty commission fees.
Old-timers Charles Schwab and Fidelity get it done, but there’s a new kid in town. Personal finance company SoFi has created SoFi Money, a cash management account, with some interesting perks for travelers.
Let’s discuss what SoFi Money is all about.
In This Article
SoFi Money is a high-interest online banking account without any membership fees. Think of it like a checking account but without brick-and-mortar locations. Customers who deposit money in a SoFi account earn a 1.60% annual percentage yield (APY) and pay nothing for the opportunity: no monthly fees, no withdrawal fees and no ATM fees. There are no minimum cash deposits and no overdraft fees.
The upside of using a high-yield cash management account is the ability to earn interest on the deposited money but still have easy access to it. If a checking account and a savings account had a baby, SoFi Money would be it.
Just like any bank, SoFi issues a debit card for your account. You can use the SoFi Money Debit Card anywhere a Visa card or a Mastercard is accepted.
Perhaps the best feature of holding the card is getting the fees reimbursed every time you use an ATM, even in a foreign country. Every time you withdraw cash from a machine, you’ll see a deposit back to your account totaling the sum of all ATM fees. There’s no limit to the fee amount or the number of the rebates you can receive. This makes worrying about running out of cash overseas a thing of the past.
If you’re familiar with the Charles Schwab Debit Card and think that the SoFi Money Debit Card is a similar product, you’re not wrong. Both cards provide comparable services. But how are they different?
The Charles Schwab Debit Card is attached to the Charles Schwab High Yield Investor checking account, which requires opening a brokerage account at the same time. This results in a hard pull on your credit report. SoFi doesn’t pull your credit at all and doesn’t require you to open any investment accounts to go with its cash management account.
By keeping an account open with either provider, you accumulate some extra cash every month by earning interest on your deposits at the APY rate. Schwab’s APY is just 0.15%, but SoFi’s is 1.6%. On a $5,000 balance, you could earn either $7.50 with Schwab or $80 with SoFi. Clearly, the math works out in SoFi’s favor here.
As for ATM fees, Charles Schwab issues them all in a lump sum at the end of every month. SoFi rebates ATM fees within a few days after each withdrawal.
Check out Anya’s personal experience using the Schwab debit card abroad.
Something to keep in mind about the SoFi account is that their website lists contradictory terms. Sometimes, the site mentions that there’s a 1% foreign exchange fee imposed by Visa passed on to you. On other pages, SoFi mentions that you will not be on the hook for this on ATM withdrawals.
Our Editor in Chief Spencer Howard tested this by withdrawing cash abroad with both a Charles Schwab debit card and a SoFi debit card. The ATM withdrawals were identical so it doesn’t seem that this 1% fee is passed onto you. Additionally, we’ve spoken to several others who have tested this with the same result — most recently, in late February 2020.
And finally, SoFi Money isn’t an FDIC-insured account until the cash is transferred to one of the six program banks, which takes two days after a deposit. If security is a concern, you might have to look at other banking options for your cash.
Schwab, on the other hand, is a fully protected financial institution with FDIC insurance on balances of as high as $250,000. If the bank fails for any reason, your money won’t burn with it.
Both cards make our list for best debit cards for international travel.
SoFi Money is a legitimate finance management service run by SoFi, a personal finance and lending company. The company has been in business since 2011 with a reported revenue of $547 million in 2018.
If you are interested in the world of market exchange, you can invest in stocks, cryptocurrency and exchange-traded funds (ETFs) with a SoFi Invest account. You can start with just $1 and purchase fractional shares (Stock Bits) with no trading fees.
When you fund a SoFi Invest account with at least $500, SoFi will reward you with another $25 in free Stock Bits for you to begin investing.
The online lender also works with financing and refinancing student loans. It’s actually how the company got started. You can refinance your federal or private student loan at a fixed rate of 3.20% to 6.08% or a variable rate of 2.31% to 7.17%. To find your rate, visit this page. By refinancing your existing student loan with SoFi, you can earn 1X Alaska Airlines Mileage Plan mile per $2 refinanced (up to 50,000 miles).
Keep in mind that SoFi might not offer the best rate on your loan, and you shouldn’t pay a higher rate just to earn airline miles. Depending on the value you personally assign to your rewards, 50,000 Alaska miles are worth roughly $750 (at 1.5 cents each).
You might want to shop around and see if another lender could beat SoFi’s rate, in which case applying for the higher offer isn’t worth it, even with the bonus miles.
In the process of saving money on foreign ATM withdrawals, you can earn some extra cash by teaching friends how they can do the same and referring them to SoFi Money.
Know anybody who’d benefit from a free money management account? Send your friend a unique referral link and receive a small bonus in your SoFi Money account once their account is opened and funded with $100 or more (within 14 days of receiving the link).
You can receive up to $10,000 in referral bonuses annually. If you earn more than $599 in bonuses per year, you’ll receive a 1099-MISC form and will be required to report your income to the IRS. It’s free money to use on your travels!
The SoFi Money Debit Card recently has transitioned from Visa to Mastercard. All Visa cards will be replaced and deactivated by May 15, 2020.
With this change comes a number of perks for cardholders.
Cell phone protection: If your phone is lost or stolen, you can file a claim for up to $200 (with a $25 deductible) toward a new device twice per year. You must pay your cell phone bill with the SoFi Money Debit Mastercard for the benefit to apply.
Mastercard Airport Concierge: Card members can receive a 15% discount on airport concierge services, such as being escorted through the airport on departure or arrival or expedited through security. The service is available at more than 450 airports worldwide.
Mastercard golf: This perk provides discounts at select golf courses, access to golf travel packages as well as free passes for PGA tournaments.
Other benefits include credit monitoring, purchase protection and extended warranty for items purchased with the SoFi Money Card.
SoFi entered the market offering student and personal loans but is now piquing the interest of travel nerds by offering a free cash management account and waiving ATM fees on cash withdrawals.
Not many traditional banks offer these types of options for frequent travelers, much less an online financial company. The SoFi Money Debit Card is an option worthy of serious consideration for those looking to have free access to local currency while traveling overseas.
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Editors Note: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.