Resolve to Waste Less:
Most people resolve to save money each year. However, they can do just as well by avoiding big money wasters. It's no surprise that bad banking behavior can cost you a bundle, so we've compiled some of the most important things you can do to stop wasting money.
1) Pay Overdraft Fees:
One way to waste money is to get beat up on overdraft fees. Banks typically charge $35 or so each time they cover for you. It doesn't matter how small a transaction is -- you pay full price just to keep from bouncing checks or having a debit card transaction denied. If this sounds expensive, look into an overdraft line of credit. You pay interest on the amount you borrow instead of a hefty fee for every charge that hits your account. The savings can be dramatic.
2) Leave a Ton of Cash in Low Yielding Accounts:
Your checking account is convenient, but it probably doesn't pay much. So why leave a bunch of cash in there? Low yielding accounts should be for quick and easy access. Put the rest of your money to work. Online savings accounts have proven themselves to be competitive and easy. Don't let your money sit and rot. Put it to work to enjoy the magic of compounding.
3) Pay Too Much for Checking:
You've seen the promises for free checking. These offers may have strings attached, but plenty of banks give you a true free checking experience with generous bells and whistles: online bill pay, imaging, checkbooks, debit cards, and more. These days you can even earn a competitive rate on balances that you can access with a debit card or online bill pay service. Instead of paying for checking, you can actually get paid for checking at some of the online banks. Check them out and check into the 21st century.
- ING Direct's Electric Orange (with overdraft line of credit)
- HSBC Free Checking
4) Ignore FDIC Limits:
2007 has been a rough year for the banks. "Subprime" became a household term. A liquidity crisis has folks worried, and we'll hear about this well into 2008. We saw NetBank fail, and there may be more (bigger) names to come. FDIC insurance only works up to certain limits. If your accounts are not fully protected, take steps -- such as spreading your money around -- to get under the limits.
5) Ignore Your Credit:
Getting a loan costs money. We know that we'll have to pay, but we don't always realize that the amount we pay is negotiable. One of the most important ingredients in a loan is your credit. You need good credit to get favorable loans, and you may even need it for insurance, a job, and more. With the recent credit crunch, some borrowers can't get a loan at all because they don't meet minimum credit standards. Therefore, it's more important than ever to understand, monitor, and manage your credit.
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