Men’s Talks

Five banking mistakes to avoid

Banking has its own advantages but it’s processes may be complicated to some people. An interaction between you and you bank ensues every time you make a banking transaction. For instance, depositing a cheque or withdrawing money from the Automated Teller Machine and a lot more. This article compiles a list of useful tips from on how to avoid making banking mistakes.

  • Paying bills manually

For recurring payments for monthly bills, you should set an automated request for the same through your online banking account. Automated bill payment can prevent you from forgetting to pay bills. This ensures that you don’t end up paying penalties for late payments. Paying your bills online also protects you from identity theft, lesser documentation and hassle-free process.

How to avoid it: Set up recurring payments for monthly bills through your current account. But automated payments are not totally hands-off. Log in and monitor your automatic payments to avoid accidentally overdrawing your account, especially for bills that vary from month to month. Regularly check your balance to make sure you have enough in the account.

Already made this mistake? If you are sending your bills through the mail now, just set up an automatic bill pay. You will find paying your bills a lot easier and faster, and you can also time them to right before your payment is due so that money stays in your account longer. And in addition, you will also save money on envelopes and stamps.

  • Keeping your current and savings accounts at the same bank

This means you should choose one bank for current, and another for your savings accounts.

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Why: It is tempting to use your savings for everyday expenses or even your rent. If you keep your savings at a separate bank, the additional time it takes to transfer cash from one bank to another will make you think twice about tapping your rainy-day funds. (Just don’t make it so hard you won’t be able to access the money in an emergency!) Splitting up your accounts will also let you get the best current account and the best savings account for you.

How to avoid it: When opening current and savings accounts, open them at different banks. When choosing your current account, consider fees and services you need day-to-day, like a wide network of ATMs. For savings accounts, look for the highest interest rate you can get, and make sure you can set up sub-accounts for specific savings goals so you don’t accidentally diminish your emergency fund for a one-week trip.

Already made this mistake? Easy. Close your current or savings account at your current bank and open the same type of account at another bank. If your current bank has a great current account but a less than optimal savings account, move the savings account and vice versa.

  • Chasing higher interest rates

What we mean: Landing the highest interest rate around feels good. But if the bank lowers it, jumping to a new bank for a higher interest rate won’t necessarily pay off.

Why: Snagging that extra half-per cent interest won’t make a big difference for your pocketbook. And with interest rates below one per cent, one new fee could wipe out a year’s earned interest.

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How to avoid it: Find banks that fit your needs and lifestyle, and stick with them. Interest rates will eventually climb back up. In the meantime, what your bank is charging you matters more.

Already made this mistake? Well, now you know – there’s no point in constantly pursuing higher interest rates. So, stick with the banks you’ve got!

  • Leaving online accounts vulnerable

What we mean: Protect bank accounts with secure passwords and practices.

How to avoid it: Choose a different password for your financial accounts than for more casual accounts to protect your most sensitive information if you’re hacked. Strong passwords have at least eight numbers, symbols and upper-and-lowercase letters. Make them random, and change them often.

Also, watch what you’re sharing on social networks. Your Facebook page could help a hacker crack your security questions.

Already made this mistake? Change your financial passwords now according to the guidelines above so that they are distinct from passwords to other sites. Also, scan all your social media accounts to remove any private information that could help someone gain access to your accounts.

  • Ignoring account transactions

What we mean: Keep up-to-date with what goes in and comes out of your account.

Why: According to Javelin Strategy and Research, one in five consumers do not monitor their personal finances. But if you catch mistakes or discrepancies soon, you will catch fraud early and avoid extra charges—and stress.

How to avoid it: Make it a habit to check your accounts regularly, such as in the transaction history. Pay attention to charges you don’t recognise, and make sure your balance is high enough to cover any checks you have written. If you are sharing an account, communicate what each automatic payment is for. That gym membership you thought you cancelled months ago, your partner could still be paying it.

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Culled from Punch

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