SoFi announced Tuesday that it's 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 1.80% APY is much higher than the national average of 0.10%. For members who don't use direct deposit, the APY on accounts is 1.00%.
In addition to the increased interest rates, SoFi is offering new members a limited-time bonus for signing up.
New members will get up to $300 when they create an account and set up direct deposit. Existing members who don't have direct deposit set up can qualify for the bonus by adding it to their account. The offer will be available through September 30.
SoFi is also offering new banking clients who set up direct deposit -- or existing clients who enable direct deposit -- up to 3% cash back with the SoFi Credit Card for one year. Existing clients who enable direct deposit will need to maintain it for the year in order to continue earning the 3% rate.
"Inflation has hit people's wallets hard," Anthony Noto, CEO of SoFi, said in the press release. "By raising our APY for direct deposit members to 60 times the national average, we're helping more people than ever get their money right and put more money in their pockets."
And SoFi isn't the only option for a high-yield savings account. Varo Bank offers consumers a potential 5% APY, M1 features a checking account with a recently increased APY of 1.70%, Marcus by Goldman Sachs features an account with an APY of 1.20%, and American Express has an account with a 1.00% APY.
The Fed is expected to increase interest rates for a third time at the end of July, possibly by another 75 basis points, or 0.75%, and then again in September. As such, the APY across savings accounts will also go up.
However, an increase in federal interest rates also means the annual percentage rate (APR) for credit cards, mortgages, personal loans, and other credit products will also increase. That means it's a good time to pay off credit card balances in order to avoid getting hit with larger interest charges if you're carrying a balance month to month.
Putting money into a high-yield bank account is a good way to generate passive income in the face of the rising cost of living. Credit cards that earn rewards for necessary purchases, such as gas and groceries, can also be a great way to earn a return on spending you have to make.
Consumers might also consider putting any excess cash into an investing platform to generate more passive income. There are a number of options -- including SoFi -- that can automate investing, lowering the bar of entry. Other options include M1, Marcus Invest by Goldman Sachs, or Wells Fargo.