Managing your bank account wisely

 

Once you open an account, it’s important to stay on top of your finances. A debit card works differentl from the credit card we mentioned in the previous module. Debit cards are actually connected to your bank account, which means when you use your debit card to purchase an item, money is removed from your account, much like writing a check. It also important to make sure that you know your account balance before you make purchases or pay obligations. 

An ATM won’t always give you the most accurate account balance because it only knows what is recorded in the bank. It’s important to keep track of checks you’ve written, debit card transactions and various account fees to find your true balance. Most ATMs allow you to check your account balance, but the balance shown doesn’t reflect charges that haven’t cleared your account. For the most up-todate information, keep a close eye on your spending and update your checkbook register daily.

 

Now lets talk about fees. There is a cost to having an account, but it doesn't have to be a great cost that will eat away at your hard earned money if we maintain our account wisely. Lets have a look at the article from the Captial One Financial Education site about bank fees:

 

 

Understanding Fees

 

There may be some fees associated with your bank account. Like other service providers, banks may charge a fee for providing certain services or in the event that you do not follow the account rules. The good news is that fees can often be easily avoided by keeping your account in good standing and practicing good habits.

 

It pays (you) to know the fees your bank charges. Ask your bank for a printed copy of its fee schedule. This way you can see exactly what the each service costs, and what you will be charged for mistakes like overdrafts.

 

Here are some examples of common services for which banks charge fees:

 

Account Maintenance Fee—Many checking accounts come with a monthly service fee. In some cases, the fee is waived if you keep a certain minimum balance in your account, or if you meet other requirements such as participating in direct deposit.

 

ATM Fee—Most banks charge a fee for using ATMs outside of their network. You could also be subject to a surcharge by bank that owns the ATM. If you use ATM’s frequently, look for a bank with an extensive ATM network, in convenient locations.

 

ATM/Debit Card Replacement Fee—Some banks charge for replacing lost ATM and debit cards. It pays to keep your card secure.

 

Debit Card Fees—Some banks charge a fee for purchases made with your debit card. Banks are required to disclose any fees in the information you receive when you get a debit card, so be sure to read the disclosure carefully.

 

Early-Withdrawal Fee—If you have a certificate of deposit (CD) and you withdraw money or close the account before it matures, you could be charged a fee. Generally this fee amounts to one month or more of interest.

 

Insufficient or Non-Sufficient Funds (NSF)—If you bounce a check, you will most likely have to pay a fee. NSF fees typically range from $25–$35 per returned item.

 

Overdraft Fee—If you’ve opted in to “overdraft protection” and you bounce a check, the bank will pay the check or debit, but may charge you a fee. Be sure to ask for and read your bank’s overdraft policy carefully.

 

Teller Fee—Some accounts, such as “Express Checking” type accounts, require you to do most of your transactions online, at the ATM or by phone. These accounts usually limit the number of times you can visit a teller each month and charge a fee for additional visits.

Tips for keeping bank fees down

 

Find out if you qualify for a checking account with low or no monthly maintenance fees. If there is a minimum balance requirement, ask if you can combine the balances in your checking and savings accounts to meet it.

 

Use your own bank’s ATM to save on ATM fees. If you can't avoid a fee, consider taking out more money at one time, rather than making numerous smaller withdrawals.

 

Use direct deposit for your paycheck or government benefits check. Direct deposit is faster, safer, more convenient, and may make you eligible for a free account.

 

 

As you can start to see, its important to avoid making mistakes with our accounts that could cost us hefty fees. 

 

Interested in learning how to balance your checkbook to avoid costly insufficient funds fees? Click here to go to the next lesson.