Most of us assume that depositing money into a bank is a very secure and smart style of saving. It can be, if we are aware when dealing with banks. Banks, even credit unions, are not charitable institutions, they are profit driven corporations that charge various levels of fees and have a large assortment of fee structures created to increase their profitability. During a credit crunch we need to save, not spend. Over the course of a year you can save some substantial money of a percentage basis if you use the following tips:
Be aware of the Opportunity Costs
What factors are effecting your money inside of your bank account. Are you being charged fees by the bank for simply giving them the opportunity to hold your money, which they make a profit off of by lending to other banks in the overnight lending market. Logically you shouldn’t be paying to make them money. Does your bank require a minimum balance within your account? And if you are under that balance are you charged an additional fee? You may be interested in some of the other options that are available to you. You should be aware of the opportunities that you are forgoing by holding your money in a straight bank account. You may be interested in comparing your current terms vs the terms of other banks. You may be able to find a lower cost option. Also, if you present research to your bank rep they will likely meet or exceed the other banks rates, which obviously will lower your own bank bill at the end of the year.
Balancing Your Books
Always make a point to keep your checkbooks balanced at the conclusion of each and every month. Fees coming from stops and NSF fees can add up quickly. The average fee for getting hit with an NSF cheque is now $35 and up. Some see an NSF here or there as no big deal but they can quickly add up. Let’s say you have even five per year, that’s $175 in bank fees, not to mention most business’ will also charge you an NSF on their end.
Relax it a bit on the ATM Machines
Unless you absolutely have to, avoid using non-bank machines. I’m talking about the ones that you will find in malls, bars, etc. Of course you should also avoid using bank machines from competing banks. These machines will usually charge you $1.50 and on top of that your bank is likely to do the same. $3 worth of fees on $20 or $40 is bad money management.
Electronic Banking
Personally I love online banking. Its simple, I avoid lines and save time. It also allows the user to have a good overview on their account. Most banks allow for free transfers and bill payments online. Save the $1.50 that you are charged for paying bills at the teller and use your online bank’s electronic system.
Money in the bank is always better than money under a mattress. But unless you stay on top of bank fees they can have a detrimental effect on your bank balance at the end of the year. And nobody needs to experience that during a credit crunch.
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