Share on Facebook
You don't want to make any mistakes while you're banking. Banking mistakes will cost you money - money that you don't want to lose. Banking mistakes won't just drain the funds from your account. They can also be drains on your time, energy and patience. You're better off avoiding them altogether.
So, which basic banking mistakes should you stop making?
Not Preventing Overdraft
Putting a checking account into overdraft is a very stressful experience. Doing this could lead to denied transactions, late bill payments or bounced checks. It could lead to a collection of overdraft fees, extended overdraft fees and NSF fees. And it could lead to weeks of struggling to pay off these extra fees and get your finances back on track.
How can you avoid overdraft from now on? You can sign up for your bank's overdraft protection plan. This should allow you to link your checking account to a savings account. If a checking account transaction pushes your balance below zero, the linked savings account will take care of the transaction to help you avoid overdraft.
Do not link your checking account to your credit card. If you do this, your overdrawn transactions will count as cash advances from your credit card - this type of credit card charge does not come with a grace period for interest. It will collect interest immediately.
Another way to avoid overdraft is to set up a low balance alert through your online banking account or your mobile banking app. This alert can trigger when your checking account balance is getting low and you're at risk of spending more than you have. Getting this alert should stop you from going overboard.
Ignoring the Minimum Balances
Many bank accounts have minimum balances that they ask for accountholders to maintain. Going below those minimums will result in certain penalties. One common penalty for going below the minimum balance is being charged a monthly maintenance fee. This fee is typically between $5-$25, depending on the bank and the account that you've opened. Your bank may waive this monthly fee if you maintain a minimum daily balance.
For some interest-bearing accounts (for example, a high-yield savings account), going below the minimum balance can result in the interest being paused until that balance is achieved once again. The threshold has to be met in order to get any passive growth.
Making Your Emergency Savings Inaccessible
You may have been tempted to open up a Certificate of Deposit (CD) and add your emergency savings as a lump sum in there, all because the savings tool comes with a high interest rate that can help your safety net grow. The only problem with choosing a CD is that the savings are inaccessible while they are building interest - which means if an emergency expense occurs, you can't make a withdrawal to pay for it right away.
You will want your emergency fund to be in an accessible account, even if it comes with a lower interest rate. A better savings account would be a high-yield savings account or a money market account. Both of these will have interest rates that are comparable to CDs and they allow accountholders to access their balances at any time.
If you've made the mistake of putting your emergency savings in a Certificate of Deposit, and you run into this problem, you can decide to make a withdrawal before reaching the account's maturity date. Doing this can result in a hefty early withdrawal penalty. Or you can apply for a personal loan online. A personal loan is a flexible way to borrow funds to help you recover from your emergency when you don't have enough savings available.
After using a personal loan to pay off the expense, you can direct your attention to a straightforward repayment plan. Over time, you will give back what you borrowed and put the stressful experience behind you.
You can avoid early withdrawal penalties or online borrowing solutions altogether by putting your emergency fund in an accessible place.
You don't have to deal with these mistakes ever again. Follow these tips and make banking a lot easier on yourself!
