Save Money: Banking

Front of a bankThe long list of ways to save money on banking and credit cards is presented below.

Set up alerts for when your bills are about due. Most banks and credit unions have this capability as does financial software.

Make sure your bank is insured by the FDIC.

Use annual percentage rate when comparing interest rates. Banks calculate interest rates many different ways but APY is standard throughout the industry. It is the only way you can compare rates consistently.

Get better rates elsewhere. Banks are notorious for paying low interest rates. Money market funds or CDs are better for investing, though they may not keep up with inflation after taxes.

Credit cards: Call customer service and mention you are planning a balance transfer unless the issuer lowers your rate. If you are a good customer, the banks will probably help out. Having a high credit score helps, too.

Borrow from a credit union instead of a big bank to get a lower rate on your loan. Since credit unions do not pay taxes (they are nonprofit), they can offer a better rate.

Smaller banks, smaller fees. Another good reason to switch to a smaller bank or credit union: Bigger banks charge fees that are 20% higher across the board, says economist and researcher Mike Moebs. Assuming four overdrafts a year, you'd save $3 a month with a modest-sized bank.

Buy checks from a 3rd party. Banks usually charge a lot for checks. Try Checks Unlimited or Check in the Mail for better deals.

Own part of the bank. Many small and medium banks give great deals to stock holders. Contact the bank and ask what deals they have for shareholders.

Link your accounts. If you have a high-yield CD in addition to a checking account at the bank, you can satisfy the minimum balance requirement if your bank treats the money in all your accounts as one combined balance.

Eliminate ATM fees. At $3 to $5 per withdrawal, those annoying out-of-network ATM fees can really add up. Three good ways to get rid of them:

  1.  Use only your own bank's ATMs.
  2.  Skip the ATM and get cash back when you're paying for groceries with your debit card.
  3. Switch to an online bank that refunds all ATM fees.

Pay your bills on time and avoid late fees. Get organized about your regular bills. Many banks and credit unions offer free bill pay programs. So there really is no excuse for forgetting to pay a bill on time and forking out the late fees. We do not recommend automatic payment of bills for several reasons: the due date may change and getting a company to change their schedule is time consuming and difficult. You become complacent about bill paying and may forget about an upcoming "invisible" bill.

Be aware of your bank balance and avoid over draft fees: If you use your checking account often or have some bills that are paid automatically from your checking account, be aware of the balance and avoid overdraft fees. Set up overdraft protection with your bank.

Overdraft Protection: Almost everyone at one point or another has had an insufficient check. Many banks today charge upwards of $25 per returned check which can quickly add up to a lot of money.  If you have a savings account, money market account, credit card or line of credit with the same bank and are still using paper checks to pay bills, consider adding overdraft protection to your checking account.  If your checking account should ever go into a negative balance, your overdraft protection will cover the negative amount without incurring excess charges. Most banks charge a small fee for this service.

Avoid ATM fees: Be aware of the ATM withdrawal fees charged by your bank. While some banks waive fees for all ATM transactions on any ATM machine, most don’t. So be sure to use only those ATM machines where your bank will not charge the fees, or withdraw directly at your bank. You can get money using your debit card at a grocery store.

Avoid credit cards with annual fee: Credit cards with their cash back bonuses and reward points are a great way to save some money. Just make sure that the card does not charge you any annual fees.

Get the right account. Work with a knowledgeable banker that can set up the right kind of account for your type of spending. There are numerous options specifically designed for people that write a lot of checks, very few checks, and those who use online banking. Check with your existing bank to make sure you have what you really need, and if they aren't willing to work with you, change banks.

Borrowing Money: Unless you have an emergency, avoid those enticing ads to lend you money at incredible rates. Banks and lending institutions make it much too easy to borrow money, especially during the holidays. Afterwards, you have borrowed money you could have done without and are now locked into a 5-year payment contract or more.

Consider online banking. One of the easiest ways to take control of your finances is with online banking. Never miss another payment even when you're traveling. Know exactly where you're spending your money. Easily create a budget, transfer money between checking and savings allowing you to shop for a high-yield savings account, use 95% fewer checks, avoid late fees, keep track of multiple accounts all in one place, and so much more.

Using Quicken software, you can set up an account with almost any bank that offers online banking services. Once the Quicken software is configured, all of your account transactions can be downloaded. You can pay bills with Quicken's bill-paying services. Quicken will automatically configure any bills that can be paid by electronic funds transfer avoiding checks and possible identity theft. You can pay bills as they come in or well in advance in the event you are traveling.

Get a cash-back credit card. Although the use of a credit card is not advisable, if you must use one, at least get one of the new "cash-back" cards and pay it off in full every month. One of the highest rated cards is the Discover® Card which offers more ways to earn cash than almost any other card of this type.  The card has no annual fee and can have an interest rate as low as 10.99% depending on your credit score.

Negotiate credit card interest rates. Contrary to popular belief, credit card interest rates can be negotiable. If you've been using the same card for a long time, you no doubt have received mail from the card service advertising low rates just for signing up for the same card you already have. Call customer service and ask for the same rate as that being offered in the mailing. They will almost always lower your rate to the existing lowest rate if you have been a long-time customer and have a clean payment history. If not, try finding a credit card with a better interest rate at BankRate.

Ask for a fee waiver. Unless you're using the bill paying service, you may find your credit card payment running a little late some day. If you normally pay your bill on time and have a legitimate excuse for the late payment, it's worth the effort to call customer service and ask them to waive the late fee which can be as much as $29 or more.  If Quicken is late paying your bill, they will pay the late fee.

Get rid of fee cards. There is never a reason to use a credit card that charges a fee. If you have one, get rid of it.

Get out of credit card debt ASAP. Credit cards carry some of the highest interest rates for borrowing money which is what you do when you charge something on a credit card. If you have a balance on more than one credit card, start by paying the most you can afford on the card with the highest interest rate. Pay the minimum balance due on all the other cards. When you have the first card paid off, begin the process on the card with the next highest interest rate. Your objective it to have no credit card debt whatsoever which could save you thousands of dollars a year if you're like the majority of consumers who owe over $8000 on credit card debt.

Banks will often lower fees if you have direct deposit with them.

Resources

findacreditunion.com - Find a credit union to fit your needs.

Bankrate.com: Find the best terms and interest rates.

CardRatings .com: Compare offers, read reviews.

BillShrink .com: Deals on credit cards, cells, gas.

Mint.com: Track spending, get alerts.

Moneyaisle .com: Banks bid for your business.

Phishing scams - Tips on preventing phishing (email) scams.

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