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Ways To Bank Smarter In The New Year

 

 

Ways To Bank Smarter In The New Year



 

Having a bank account is convenient and helpful in many ways. A checking account can make it easier to pay bills or make purchases with a debit card. Savings accounts, money market accounts, and certificates of deposit (CDs) are safe and secure places to store money in the short or long term with interest earning on balances. Almost 95% of American families have at least one bank account, according to the FDIC. The start of the new year is a great time to reassess your bank accounts and banking habits. As you look into the next 12 months, consider these practical tips for smarter banking. 1. Limiting bank fees Bank charges can grow rapidly, reducing your account balance. Of the roughly 7.1 million US unbanked households, 34% said high fees were one of the reasons for not having a bank account. Some of the most common banking fees you may encounter include: Monthly service fee Overdraft fee Insufficient funds fee Returned item fee Third party ATM fees If you haven't checked the fees you pay to your bank recently, it might be a good time to review your client agreement to see how much you are charged. Then, consider how you can avoid some of these fees. For example, setting up low balance alerts might prompt you to make a deposit to a checking account to avoid overdraft fees or monthly maintenance fees. 2. Consider switching to a cheaper bank transfer. Switching banks may seem like a headache, but it's not as difficult as you might think. Moving to a new bank might make sense if it allows you to lower your fees. When thinking about changing your bank account, take the time to compare traditional banks, credit unions, and online banks. Online banks can be more economical as they have lower overheads and thus can provide customers with some savings. 3. Check the interest rates that you earn. Savings accounts, money market accounts, and CDs can all help you multiply your money, but banks are not alike when it comes to interest rates or the annual interest rates they offer. When the Federal Reserve cut rates in early 2020, many banks followed suit, cutting rates offered to depositors. This is not a reason to stop saving. But that means you have to look at what other banks are offering to try and find the best rates. Again, online banks can have the most attractive rates. But of course, you should also consider things like minimum deposit requirements, minimum balance requirements, and monthly fees before moving on to a higher rate. 4. Shop all over the world to get better deals on the rates you pay. While lower interest rates are not ideal for savers, they can be helpful when borrowing money. Whether you have student loans, car loans, personal loans, or mortgages through your bank, low interest rates can provide ideal conditions for refinancing. Refinancing allows you to replace your existing loan with a new one with a lower interest rate. There may be some cash costs depending on the type of refinancing. For example, when refinancing a mortgage, you may have to pay closing costs if you are unable to include them in the loan. Using a mortgage refinancing calculator can help you estimate how much you can save with a new loan. Consider talking to your current bank first about refinancing rates and using them as a starting point when comparing them to other banks. 5. Get to know online and mobile banking tools Online banking and mobile banking can make it easier to manage your accounts, so you can reduce the frequency of visiting a branch. But you may not be taking full advantage of the tools your bank offers. For example, a mobile check deposit can be a convenient way to credit checks to your account. You just take a picture of the receipt on your phone - no visit to a branch or ATM is required. Other online and mobile banking tools that you may be missing include: Bill Payment Alerts and Online Bill Payments Security warnings and notifications Automatic transfers between accounts or accounts with an external bank Individual payments Electronic statements If you haven't taken the time to fully explore your bank's online and mobile banking capabilities, consider adding this to your financial to-do list. And if in