OK first let me start of by saying that I am a banking professional. I work for a very large bank, see if you can guess which one lol. I see people everyday who do not know how to manage their money with a banking institution. I would say 75% of customers are probably in the wrong account for their needs or, they do not understand how banking works. Most of the money that you will earn over your lifetime will pass through some sort of banking institution (I hope ) :). Sooo, take time to review your options! It could save you alot of time, frustration and MONEY!
This post is to help anyone who banks anywhere, to learn the basics of banking. Now as you are reading this you are probably thinking, I already know how the banks work...Well I'm here to bust your bubble, if you are getting more than $100.00 worth of overdraft fees a year, are just now noticing your account is getting charged a monthly service charge (or still haven't noticed) then you could use a little brush up course on banking.
Think of me as your personal banker if you will. I want to save you money, after all we are in a recession right!? Let me start off by saying that I am not trying to sell you anything. Where you bank is your business, be it Bank of America, Chase, Wells Fargo, it doesn't matter to me. I just want you to understand how banks deal with YOUR money.
This post will mainly deal with overdraft fees. First off All banks charge overdraft fees! This is a large percentage of the money they make. The prices may vary slightly, I have seen them as low as $25.00 all the way up to $39.00. For every item that comes into your account and puts you in the red, you will get a charge. OK so lets say your Bank charges you 30.00 per fee. You go to 4 places... and spend $3.00 at each of these places. If these transactions overdraw you, even for a measly $12.00 total you are going to pay 4 fees of 30.00 for a total of $120.00! OK I will be honest, I have gotten overdraft fees. Slightly embarrassing to admit, working for a bank and all..but sometimes life happens right? The point is overdraft fees are optional...you do not have to get them. I am going to let you in on a insider banking secret......get overdraft protection!! OK, so not really a secret, but not enough people have it or understand how it works. First off get overdraft protection with a SAVINGS account and not with a credit card. Why? well this should be self explanatory, if you are overdrawing you probably should not be borrowing money from a line of credit (which you will have to pay back w/ interest). Keep it simple and get a Savings..which we all should have in a recession anyway. The savings can be linked to your checking so that when you overdraw an auto transfer of the funds from your saving will occur, to cover your transactions.Then there is usually some sort of fee that is charged for the auto transfer. Check with your bank to see what the charge is and if there is a min you need to keep in your savings to avoid getting a monthly service charge.
A quick example of how Overdraft Protection can save you money. Going back to my earlier scenario where you would have overdrawn just $12.00 and paid $120.00 in fees. if you had overdraft protection the bank would have taken money from your Savings account to cover your $12.00 and charged you a nominal fee of probably around $10.00 or less. This would have saved you $110.00. ENOUGH SAID!! Don't fall into the trap of thinking I don't want to touch my savings..that's for an emergency or I am saving up for this or that. You could possibly be giving more money to the bank a year that you have in your savings!!?? Don't use overdraft protection as a way to stop keeping track of your account. It is just a safety net.
Now there are other tips to help you avoid overdraft fees. But this post is getting extremely long so I will stop for now. I hope this convinced some of you to get overdraft protection, because in the long run it can keep more of your money where it belongs....and that's in your account!
For other tips on how to utilize a savings account visit Savings Account
Monday, February 23, 2009
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