Banks and credit card companies make a ton of money every year on fees – late fees, ATM fees, overdraft fees, user fees, checking account fees. Here are 10 simple steps you can take to save money on banking and credit cards.
1. Get the right account for your spending style.
Make sure you work with a knowledgeable banker that can set up the “right” kind of account for your type of spending. There are numerous options specifically designed for people that write a lot of checks, very few checks, and those who use online banking. Check with your existing bank to make sure you have what you really need, and if they aren’t willing to work with you, change banks. A good example is if you are over 50, many banks will give you free checking.
2. Overdraft Protection
Almost everyone at one point or another has had an overdraft on their checking account. When two people in a household write checks or use debit cards from the same account without the other being aware of the amounts being debited is when this situation occurs. Many banks today charge upwards of $30 per returned check or overdraft which can quickly add up to a lot of money. If you have a savings account, money market account, credit card or line of credit with the same bank, consider adding overdraft protection to your account. If your account should ever go into a negative balance, your overdraft protection will cover the negative amount without incurring excess charges. Most banks do charge a small fee for this service.
3. Borrowing Money
Unless you have an emergency, avoid those enticing ads to lend you money at incredible rates. Banks and lending institutions make it much too easy to borrow money, especially during the holidays. Afterwards, you have borrowed money you could have done without and are now locked into a 5-year payment contract or more. Remember, PAY CASH except for emergencies.
4. Watch out for “foreign” ATM’s
“Foreign” ATM’s are those that are not part of your bank’s system. ATM’s in shopping malls, convenience stores, other banks for example often charge a fee upwards of $1.50 for accessing cash at their machines. Fees as high as $5.00 are not uncommon in some places. Get cash from your own bank’s ATM or at the grocery store where they will often ask if you want “cash back” without charging a fee.
5. Bank online.
One of the easiest ways to take control of your finances is with online banking. Never miss another payment even when you’re traveling. Know exactly where you’re spending your money. Easily create a budget, transfer money between checking and savings, use 95% fewer checks, avoid late fees, keep track of multiple accounts all in one place, and so much more. Using Quicken software, you can set up an account with almost any bank that offers online banking services. Once the Quicken software is configured, all of your account transactions can be downloaded. You can pay bills with Quicken’s bill-paying services. Quicken will automatically configure any bills that can be paid by electronic funds transfer avoiding checks and possible identity theft. You can pay bills as they come in or well in advance in the event you are traveling. Once you try online banking, you will be hooked — guaranteed. Of course, you can also set up bill pay online directly with your bank. Quicken, however, is better for keeping track of your finances.
6. Get a Cash-Back credit card.
Although the use of a credit card is not advisable, if you must use one, at least get one of the cash-back cards and pay it off in full every month. Whatever you do, do not get one that has an annual fee.
7. Negotiate credit card interest rates.
Contrary to popular belief, credit card interest rates can be negotiable. If you’ve been using the same card for a long time, you no doubt have received mail from the card service advertising low rates just for signing up for the same card you already have. Call customer service and ask for the same rate as that being offered in the mailing. They will almost always lower your rate to the existing lowest rate if you have been a long-time customer and have a clean payment history. If not, try finding a credit card with a better interest rate at BankRate .
8. Ask for a fee waiver.
Unless you’re using the Quicken bill paying service, you may find your credit card payment running a little late some day. If you normally pay your bill on time and have a legitimate excuse for the late payment, it’s worth the effort to call customer service and ask them to waive the late fee which can be as much as $29 or more. If Quicken is late paying your bill, they will pay the late fee.
9. Get rid of fee cards.
There is never a reason to use a credit card that charges a fee. If you have one, get rid of it.
10. Get out of credit card debt ASAP.
Credit cards carry some of the highest interest rates for borrowing money which is what you do when you charge something on a credit card. They should rightfully be called debt cards. If you have a balance on more than one credit card, start by paying the most you can afford on the card with the highest interest rate. Pay the minimum balance due on all the other cards. When you have the first card paid off, begin the process on the card with the next highest interest rate. Your objective is to have no credit card debt whatsoever which could save you thousands of dollars a year if you’re like the majority of consumers who owe over $8000 on credit card debt. If you need help getting out of debt, try Zilchworks. They even offer a free trial of their debt-reduction software.