With all of the fees and low interest rates on savings accounts, banking can be surprising expensive. Consumer United has compiled a list of tips to help you avoid hidden fees and needless hassles.
Stay informed. A lot of banks stagger the order in which checks are deposited and accounts are debited in order to charge as many overdraft fees as possible. Keep a "cushion" in your checking account to ensure that any crafty banking practices won't dent your wallet.
Consider alternatives to a traditional checking account at a large, national bank. Credit unions sometimes have more flexibilities when it comes to overdrafting, and prepaid debit cards can also be a good option for customers who frequently send their accounts into the red through point of sale transactions.
Find a bank that works and stick with them. Banks may be more likely to accommodate the requests of long-term customers who have both checking and savings accounts. It's expensive for service providers to acquire new customers and maintaining a history with your bank will make them want to lose their established customers even less.
Get back to basics. With multiple accounts and a wallet full of debit and credit cards, it can be difficult to keep track of numerous balances. The more cards and accounts you have, the easier it is for you to overdraft. It's old-fashioned, but allotting a designated amount of cash for spending each week is a fool-proof solution.
The folks over at the Huffington Post have launched a campaign called Move Your Money, a movement that encourages the masses to withdraw their cold, hard cash from the big-six banks on Wall street and redeposit their savings into well-rated community banks.
Why make the switch? "Community banks are typically more conservative about how they manage their money, they're more closely connected to the people and businesses who live near them, and they're more inclined to make loans they know will get paid back. In other words, they have the values that more people would want banks to have," the site says.
In addition to the obvious benefits of shopping locally, community banks generally offer better deals and specialize in customer service.
But, is it post-recession sour grapes?
In a recent segment on NPR's "All Things Considered," economist Simon Johnson says the Move Your Money campaign is less about revenge against the Wall Street banks and more about personal responsibility.
NPR: "But why punish the banks if they have almost all paid back what was essentially an investment by the federal government?" [i.e. TARP funds]
Johnson: "It's not about punishment, it's about responsibility, about people looking forward, and saying, 'How comfortable am I with the largest six banks in this economy now having total assets--which of course come from their liabilities, which is money they get from us--total assets of over 60 percent of the size of our economy, 60 percent of DGP?' That's a big banking system that's more concentrated than in the past--those same six banks back in the 1990s were less than 20 percent of GDP."
With all of the fees and low interest rates on savings accounts, banking can be surprising expensive. Consumer United has compiled a list of tips to help you avoid hidden fees and needless hassles.
