Did you know that on average, banks rake in around $9 billion in overdraft fees each year? We’ve all been there at some point or another. Among other common personal banking mistakes, overdrafting on your account is avoidable. So, how do you avoid that dreaded fee and other common banking mistakes?
Continue reading for a few tips on how to avoid some of the most common personal banking mistakes. To begin…
Review Your Statements
A common banking mistake many people make is not confirming or looking over transaction history. One way to avoid this common mistake is to look through your bank statements frequently in order to catch any errors and spot any unusual activity.
By looking through your transactions on a regular basis you’ll also be able to catch any duplicate or fraudulent charges that may have otherwise slipped through. By keeping up with your statements, you’ll also be able to cover any future purchases without overdrafting your account.
Utilize a High-Yield Savings Account
Another common personal banking mistake many people make is that they don’t look to utilize high-yield savings accounts. Typical savings accounts have low annual percentage yields. By using a low-yield savings account when parking your money, you’re leaving money on the proverbial table.
When looking at inflation, and cost of living increases, storing your money in a low-yield savings account simply doesn’t make sense. You can avoid this mistake by utilizing a high-yield savings account at your financial institution and earn yourself a little extra money while keeping your funds safe.
Diversify Your Accounts
We’ve all had to dip into savings for one reason or another. By having your checking and savings accounts set up at the same banking establishment, it’s even easier to dip into your rainy day fund. In order to avoid this pitfall, you can diversify your accounts between different types of banks. For example, perhaps one bank offers excellent car loan rates and another offers you a great high-yield savings account.
There are plenty of ways in which you can diversify where your money is coming from and where you can put it in the future.
By doing this, you’re avoiding the temptation of dipping into savings when its not always necessary to do so. To that end, you can also choose to set up multiple savings accounts for various reasons such as emergency funds, future expenses, and vacation funds.
Avoid Fees by Planning Ahead
Banks today charge fees for any number of reasons. Some of which include:
- Annual checking fee
- Annual savings fee
- International or ATM transactions
- Monthly service fees
For example, certain banks offer waived international transaction fees. Others still will waive checking account fees if you keep your account active and regularly use it for transactions. You can avoid incurring extraneous fees by planning ahead and double-checking the terms and conditions offered by the bank for your particular account or card.
Planning ahead can also mean utilizing educational resources related to banking. Some sites, such as paradigmlife.net/blog/how-to-be-your-own-banker-in-5-steps/ provide a wealth of information on how to plan and utilize resources to your financial advantage.
Avoiding Personal Banking Mistakes
When it comes to personal finances, the best bank is the one that works for you and your money. Hopefully the above tips will help you avoid some of the most common personal banking mistakes, all while helping you grow your wealth.
For more ways to grow your financial literacy, be sure to browse through the articles offered in our Money section. Happy saving!