General Good “Cents”
- Review your bank statements online at least weekly. This allows you to keep track of mistakes you may have made and can alert you to any unusual activity that means your account has been compromised.
- Direct deposit is great, but it may be wise to transfer monies from your primary checking to another checking account that is budgeted per month and from which you take daily debit charges and other pick-up items. A checking account that has 50 transactions per month is high volume and harder to keep track of. One account for small and daily transactions that is limited will help you keep your accounts clean and maybe even help you limit your spending.
- Visit your local bank branch and get on speaking terms with the manager. If you have problems or want to negotiate on overcharges, you will have more leverage.
- If you are robbing Peter to pay Paul at the end of the month to pay bills, it may be better to take out a short-term loan or use your credit card than to overdraft. The overdraft charges are really interest on a loan, and at $24 to $37 dollars per check, it is exorbitant interest.
Shop for the cheapest checking account.
- Compare fees at several banks. Things to look at are transfer fees, ATM fees, overdraft fees, balance fees, and—yes—even counter fees (for face-to-face with tellers).
- Local and smaller banks usually charge less than chain banks.
- Link your accounts so that your savings account can be accessed by your checking account(s) to save on overdrafts and so you can keep monies in savings where they are earning some interest. But, make sure your bank does not charge transfer fees from one account to another.
- No frills accounts are usually best. They may not give interest on your checking balance, but they are cheaper and have the lowest balance minimum. Interest bearing accounts only pay about 1% interest, require a minimum balance, and, if you dip below that balance, charge you a penalty fee.
- “Free” checking accounts are good as long as you have money and don’t overdraft. Ask about the overdraft fees for such accounts. Banks usually make up for the no-charge account by punitive overdraft charges.
- Don’t have courtesy overdraft protection. They will cover your check but charge you dearly for the service. And, you will not always know when you’re using the service unless you keep careful track of your balance.
- Consider adding or linking to your bank account an online “savings” account or money market account that guarantees you at least 2% interest. These accounts earn better interest than interest-bearing checking accounts, and, if linked, can still be used to draw from when you have an overage on your checking account. These accounts are FDIC guaranteed, too. Look at ING Direct for more information.
Avoid other added charges.
- Be careful about your bank merging with a larger bank. At such time your fees could change, and they’ll usually be headed upwards. Watch your mail for announcements. It may be time to shop around for a cheaper bank account then.
- It used to be ATM and debit card use would indicate when you had insufficient funds–not so now. You should be aware of your checking account balance so you won’t be surprised by an overdraft from the weekend ATM withdrawal.
- Deal with banks that have ATM readily available so you won’t have to use another bank’s ATM and pay an additional charge. In fact, ATM use should be held to a minimum to avoid transaction charges.
- Don’t buy your checks from your bank. Banks will charge you $20 to $25 for 200 checks. www.checkdicounters.com (1-800-204-2244) will charge you $6 to $8 for the same amount.
- Know about high-low processing. If you have $200 in your checking account on a Friday night and withdraw $100 in two different transactions over the weekend, you have not overdrawn your account. Monday, if you write a check for a bill that amounts to $220, you know you have an overdraft for which you will incur an overdraft charge. But, be aware you will have three overdraft charges! The reason is banks debit the largest amount first! [It is wise for you to contact your Congressional delegation to make sure your legislative representatives vote for provisions in the Card Holders Bill of Rights to limit these overdraft practices-6/09.)