Banking, savings, and personal finance can be an extremely complicated matter. However the good news is that it does not necessarily have to be. In order to gain as much financial success as you can you need to get a good grasp of the basics, keep in the right mind set, and start making your money work for you. Let’s get right into some of the basics with these 10 facts you need to know about banking.
1. Stashing Money in a Bank Account is Safe
A bank is a top option if you want to keep your money safe. Due to the current credit crunch, banks are starting to insure accounts up to as much as $250,000 per account holder. It really doesn’t get much safer than that.
2. Convenience Costs Money
It is important to keep in mind that accounts can be costly. It is not unheard of for fees to add up to a few hundred dollars per year, if you do not keep the minimum required amount in an account.
3. Inflation can Kill your Earnings
While some people get excited about the interest that they earn from their bank account, it isn’t always worth the excitement. The annual rate of inflation for all kinds of goods and services will usually snuff out any interest you earned.
4. There are Better Rates out there
CDs (certificate of deposits) offer some of the best rates you can find anywhere, and they are insured quite a bit. The only catch is that you need to lock up your money for at least 3 months or up to 5 years. If rates decline the bank still has to fork over what they promised to earlier, and vice versa.
5. Interest Rates are not All the Same
All banks tend to use completely different methods to come up with interest rates. In order to compare your potential earnings on different accounts you should ask for the annual percentage yield of each account. Most banks use both APYs and interest rates, but APYs are all calculated in the same manner.
6. ATM Fees are a Savings Killer
Sure ATM’s are convenient, but they can take a huge chunk out of your account. On average you will be charged just under $1.50 by your own bank each time you use another bank’s machine, and then close to $2.00 will be taken out by the company that actually owns the machine.
7. It takes Time to Find the Best Deals
Just like how you won’t always find the best house on the market by throwing an offer on the first house you see, it takes time to find a good banking deal. You need to shop around and compare what each company offers. There are all sorts of little extras you may be able to take advantage of.
8. The Internet is a Valuable Resource
The internet is one of the best ways to compare bank rates, prices, and fees. There are specific sites that can instantly compare offers and save you the time and hassle of driving from place to place and hearing long, drawn out sales pitches.
9. Banking Online is A Time Saver
Paying bills can be a really big hassle, time killer, and a drawn out process. Using online banking can make it a lot easier to pay your bills, and pay them on time. You can even set up a program such as Microsoft Money and connect your financial planning with everyday banking. However you still need to keep on top of paper statements that are sent out, as that is legally the only way banks have to tell you about price hikes.
10. You Might not Need a Bank
A retail bank isn’t your only option. In fact there are a number of other institutions that deal with banking and offer the same services. There are credit union accounts and money market funds that may work out better for you than an actual bank. Be sure to look into them when comparison shopping.
While you still have a lot of information to look into, these 10 facts will help you get on the path towards financial stability, and should help make sure you make all the right decisions. Banking does take work, but a few smart decisions can have you laughing all the way to the…..well, bank.