Using his/her bank account, an individual can sail through emergencies, apart from funding future goals, and meeting long-term financial objectives.
At the same point in time, we need to be vigilant about our banking activities. This article will create awareness about some of the common mistakes we commit while banking and how to address them.
Paying Bills Manually A Big No
Set up an online recurring payment mechanism for your checking account. However, you need to log in and monitor your automatic payments to avoid accidentally overdrawing your account, especially for bills varying from month to month.
The ‘Automatic Bill Payment’ mechanism makes the whole process easier and faster, and you can also schedule these payments beforehand to ensure that your account has enough money in the lead-up to the automatic transactions.
Blind Loyalty Towards Your Bank
Often we tend to stick with the same bank for years where we opened our first-ever account. However, we don’t get rewarded for loyalty all the time as the latter sometimes provide their best rates, deals, and promotions to new customers.
‘Shop around’ multiple banks for loans, mortgages, and payment cards. Enjoy the lower fees, better interest rates, more services, and sign-up bonus provided by the banks. Choose one bank for your checking account, and another for your savings account.
Forgetting The Credit Unions
A credit union/small bank provides better interest rates, fewer fees, and superior customer service. Here, checking accounts also pay interest rates that compete with interest rates on savings accounts. In big banks, checking accounts come with negligible interest.
Small banks have drawbacks like limited operational hours and fewer branches (or in the extreme case, an online-only presence. Also, check whether the bank’s ATM is part of a network of thousands of ATMs around the country, and if not, whether the bank reimburses/waives ATM fees.
A credit union uses the collective financial power of its members to run accounts, service loans, and earn money investing. They also have lower eligibility requirements, lower interest rates, and the same federal deposit insurance that typical banks do.
Despite lacking physical branches and the variety of financial products on offer, credit unions cover most of the basic banking needs.
Chasing Higher Rates
If your bank lowers the interest rate on your account, jumping to another bank for a higher rate won’t be a prudent option.
All you will get is an extra half-percent interest. On top of that, a new fee could wipe out a year’s earned interest.
Find and stick with banks that fit your financial and lifestyle needs. Interest rates are volatile according to the market situation. Like how they go down often, then can climb back up as well.
Many banks advertise high introductory rates, hoping that it will improve their customer onboarding process. However, these rates often go down, thereby making your bank switch a lost cause.
Ignorance Towards High Fees
Study your account’s “fee schedule,” available on your bank’s website (or you can even ask your bank’s customer executive to obtain the information).
If your bank announces a change in its fee structure, pay attention to it, cause the devil lies in the details. Think about switching banks/accounts. Also think about options like maintaining a minimum balance or going paperless, to avoid some of these fees.
“If your bank is just fee-happy no matter what type of account you have, take your business elsewhere—or just threaten to. Sometimes, bank representatives will waive new fees to hang on to loyal customers,” stated a BankBazaar article, and yes, it sounds like one of the potent solutions.
Paying For A Checking Account? Please, Don’t
Paying money on a monthly basis just to dispose of bills, deposit money and get cash sounds unreasonable here.
If your free checking on the existing bank account comes with ‘terms and conditions’, do web research or in the best case, call up your bank to determine how you can turn your account into a free one.
Can you set up a direct deposit? Explore the option too.
Also, don’t make your money sit in your checking account. Try to invest the amount somewhere else as you won’t earn extra interest by making your cash sitting idle. Try to push the money for a high-yield savings or investment account.
Be Mindful Of Overdraft Protection & ATM Fees
“Overdraft protection” offered by banks lets the customers keep spending after they have emptied their checking accounts. The bank will cover the payments, but the customer will have to return the money eventually with a hefty surcharge fee.
Try to control your spending spree and set aside ’emergency cash’. You can also sign up for a line of credit if your bank account becomes zero, but that option will come with high-interest rates.
Banks also use ATM fees as their revenue source. Some accounts come with a limited number of monthly allowed ATM transactions. If you cross the limit or if you are using an ATM excluded from your bank’s network, the fee will kick in.
Look for a bank/account type that doesn’t charge you ATM fees.
Keep A Tab On Your Account Transactions
The activity takes just a few seconds and a few clicks on your smartphone. It will help you to catch mistakes/discrepancies well before time and avoid the stress of paying extra charges.
Check your account balance regularly, and note down even the slightest of the changes in the monetary figures there. If you’re sharing an account with an automatic payment facility, communicate with your partner about his/her payment history.
Be aware of the ‘Mystery Charge’ or a ‘Recurring Bill’.
Leaving Online Accounts Vulnerable
Protect your online bank accounts with secure passwords and cyber practices. Choose a different password for your financial accounts to protect your most sensitive banking information. Change the passwords after every three months. Scan your social media accounts to remove private information that could help someone gain access to your accounts.
Don’t re-use your Email/Facebook password to login to your online bank accounts. Add two-factor authentication (2FA) to your bank account login.
Don’t Ignore Rewards
Your credit card can give you extra cashback if you use it at a certain gas station/grocery store. Your service fees can go down if you have multiple accounts with the same bank. You can also qualify for a cash sign-up bonus after you open your account.
Just keep an eye on the perks and rewards programs your bank is offering.