Ways to Save Money - Part 7 In A Series - by David Ning

Banking

1. Shop your banking services carefully. As banks consolidate, competition is decreasing and fees are increasing. Think about the services you need first, then call around and see who can deliver them for the least money. Do you do a lot of ATM transactions? Then you need a bank with lots of branches and ATM machines to avoid paying “foreign” ATM fees. Do you travel a lot? Then you want a bank with branches in the states you often visit. Do you need online banking? Find a bank that doesn’t charge for this convenience. Do you write just a few checks a month? Find a bank with a stripped-down inexpensive checking account. You get the picture. Think about what you need before you go shopping, and be sure you understand all the fees before you sign up. In general, you’re going to get better deals from smaller local banks rather than the biggies.
2. Don’t use a bank! Instead, use a credit union. Credit unions generally offer lower rates on loans, higher rates on savings, and lower fees than commercial banks. To find one that will accept you as a member, ask your employer or open the yellow pages and make a few calls.
3. Use only your bank’s ATM. Avoid fees to get to your own money!
4. Don’t use a passbook savings account. These accounts are old-fashioned and pay very little interest. You’re much better off with your bank’s money market account. You’ll earn more interest, your money will be just as safe, and you’ll still be able to get to it at any time. For a little more interest with just a tiny bit more risk, consider money market mutual funds. These aren’t federally insured like bank money markets, but they’re normally plenty safe.
5. Check your checks! There’s no law that says you have to buy checks and deposit slips from your bank. There are companies that will sell them to you for 50% less.
6. Don’t pay fees to have a checking account. There are now online banks that will charge you nothing for your checking account, and even pay interest on it. Shop around, and you might even find the same with old-fashioned bricks-and-mortar banks. Eliminating the fee on your checking account could easily save you $100 a year.
7. Be aware of fee changes. Did you know that banks most often mail notices of fee increases between Thanksgiving and Christmas? That’s because they know that you’re least likely to read it during that busy time. Don’t let them fool you. Read fee notices.
8. Ask and you might receive. Years ago, Money Magazine called 10 credit card lenders and merely asked them to lower their interest rates. Three out of 10 did it! This could work in all areas of banking. If your bank is charging you high interest or high fees, try saying something like, “Gee, I’ve banked here for years, but I can get much better deals from your competitors. Can’t you lower (eliminate?) this fee (interest rate) so I don’t have to leave you?” You’d be surprised how often this simple tactic could work.
9. Go direct! Direct deposit of money you receive and direct payment of bills you owe can save you postage, gas and hassle. And it could increase your interest earnings to boot. See what your bank offers and take advantage of it.
10. Balance your checking account! Estimates of people who don’t bother to reconcile their checking accounts range from 6% to 20%. If you don’t keep track of what’s in your account, you should just carry cash. Because sooner or later, you’re going to be paying giant fees for bounced checks!
11. Give yourself credit. If you’re going to have credit cards, get the best possible deals. If you pay off your balance every month, get a card with no fee. If you don’t, get the lowest possible interest rate, but don’t forget to include any annual fees in the interest price you’re paying. You can find good credit card deals in magazines like Money and Kiplinger, or online at web sites like www.bankrate.com and www.ramresearch.com. And, as you’ve learned from reading this book, remember that a life with no debt is always your best option.
12. Be aware of “stealth” fees. Hidden fees abound in credit cards. They include fees for going over your credit limit, transferring your balance to another company and paying late. The only way you have of finding out about these fees is to call the issuer or read the microscopic print found on the original disclosure paperwork or monthly statements. You should also be aware that your card issuer can sell your account at any time to a company that will change every term you have including the interest rate. Be vigilant.
13. Know the lingo. When we shop for credit cards, or any loans for that matter, the focus is always on the interest rate you’re being charged. While that’s obviously the main thing, it’s not the only thing. In the case of credit cards, you also need to inquire about “grace period.” That’s the period of time you have after using the card before the interest clock starts ticking. Twenty-one days is typical, but obviously the longer the better. You also need to know about all fees: the annual fee, and any possible fees that could occur on cash advances, late payments and balance transfers. Once you’ve uncovered all the costs, only then can you really compare apples to apples.