There are many reasons for opening a bank account. Having your money in an account is safer than holding cash. A bank account may be a less expensive way to
manage your finances than alternatives such as buying money orders to pay your bills or paying a business to cash your paycheck.
In general, banks pay lower rates on interest-bearing accounts than brokerages and mutual fund companies that offer check-writing privileges. Another thing you need to be aware is bank fees can be high, account costs can easily add up to $200 a year or more unless you keep a minimum required balance on deposit.
Inflation Can Outpaces Bank Interest
You earn interest by putting your money in banks, but because of the annual creep in the cost of goods and services that causes the creeping of inflation, usually outpaces what banks pay in interest-bearing accounts.
Not All Interest Rates Are Created Equal
Banks may use different methods to calculate interest, thus, it makes you hard to compare how much you will earn from various accounts in a year. But there is one calculation which is used in the same way everywhere, this is “Annual
Percentage Yield”. Hence, you can ask for each account’s “Annual
Percentage Yield” and use this figure to compare how much money you will earn from your accounts in a year.
You Can Get A Better Rate
Banks pay lower rates on interest-bearing accounts but in return it is the safest places to stash your cash. If you are looking for low risk saving like bank but a better rate than pay by banks. Certificates
of deposit can be your option. Certificates of deposit (CDs) offer some of the best guaranteed rates on your money but the catch is your have to deposit a certain amount of money in to the CD account and your money will be lock up for a defined period of time, such as 3 months to 5 years. The best part is if interest rate is dropped, you will still be given the quoted/guaranteed rate, but if rate climb, you are stuck with the lower rate.
Budget In ATM Fees
ATM fees can take up a significant bite out of your budget. On average, the bank charges about $1.50 to use another bank’s ATM (automated teller machine) to withdraw your money. If you use to use other bank ATM to withdraw your money, then you better budget in the ATM fees so that you have a better control on it.
Shop For Best Deal
You won’t get a great banking deal
unless you comparison-shop and ask about their price breaks. For time to time, banks are offering best deal to their customers; for example, a bank might offer free checking if you are shareholder or if you direct deposit your paycheck & etc. Many banks are putting their offers online; hence you can also shop online and compare fees, yields, and minimum deposit requirements nationwide. Shop and compare as many deals as possible to get the best deals that offer you the best service and save you on the most in service charges.
Online Banking Make Easy On Bill Payment
Electronic bill payment system offers by banks can save you the monthly hassle of paying your bills. Financial software such as Quicken and Microsoft Money allow you to link your banking with your budgeting and financial planning, hence making easy your budget control
and monitoring.
|
|
|
