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Breaking Bad Banking Habits: 5 Mistakes to Avoid

As consumers, our relationship with banks is a crucial aspect of our financial wellbeing. It is important to understand the common bad banking habits so we can avoid them and make the most out of our banking experience.

In this article, we will discuss the five most common bad banking habits that people fall into and how to avoid them.

1) Settling for the Local Branch

One common mistake people make is settling for the nearest branch rather than seeking out banking options that may better suit their needs. If you are not completely satisfied with your current bank, then its time to consider other options.

First, try researching banks online and use search engines to find local branches. You may find a bank with similar services where you can get a no-fee account, a low-fee account, or a high-interest rate.

Many banks also offer virtual banking options these days, so you can do banking on your phone or web browser. Don’t be afraid to test out different banking options until you find the one that works best for you.

2) Not Taking the Time to Read the Fine Print

Another mistake that people often make involves not reading the terms and conditions beforehand. Never open a bank account without reading the fine print.

Failure to understand the terms and conditions of your bank account can result in unnecessary fees and restrictions on your account. Look for details on yields, fees, APY, minimum balances, transaction limits, and restrictions.

Take note of whether a spouse or partner is needed to open the account, or if there are any upcoming changes to the bank’s acquisition. Consider reading the fine print yearly to review any updates in banking policies.

3) Not Doing an Annual Check-In

Many people make the mistake of not checking on their bank accounts once a year. It is important to regularly evaluate your bank account to ensure that it is meeting your needs and has the best fees and interest rates that suit your lifestyle and financial goals.

Review the terms and conditions of your bank account, including the fee schedule and transaction restrictions. Check your bank’s acquisition policy to ensure that the accounts ownership remains where you want it.

4) Not Taking Advantage of Online Tools

Online banking is an essential tool that has become increasingly popular as technology advances and people’s lives grow busier. Utilizing online banking options can save time and provide additional rewards.

Features such as bill payment, awards, cash apps, and virtual banking can enhance the banking experience. Give yourself a chance to discover the perks that virtual banking can offer.

5) Paying Overdraft Fees

Another mistake that people make is overdrawing on their accounts, resulting in overdraft fees. Overdraft protection can help prevent this, but it may lead to declining transactions that will not be completed due to insufficient funds.

No modern bank requires overdraft fees, and you always have the option to turn it off. The Consumer Financial Protection Bureau has called out this banking practice and encouraged banks to offer no-overdraft protection policies.

Leaving Too Much Money in Your Checking Account

It’s easy to leave too much money in your checking account, but it’s important to remember that checking accounts are not designed to save money. Unless youre using a high-yield checking account with attractive interest rates, keeping money in a checking account is detrimental.

Instead, move funds to a separate high-yield savings account where the interest earned has the potential to outweigh the impact of inflation. Remember to adjust your savings rate to match the current interest rates offered in the market.

As these rates can fluctuate and change, staying up to date can make a considerable impact. In conclusion, making good banking habits involves understanding and avoiding bad banking behaviors.

If you want to make the most of your banking experience, be sure to avoid settling for your local branch. Instead, research and embrace virtual banking options, take the time to read the terms and conditions, and conduct an annual check-in on your accounts.

Also, consider taking advantage of online tools such as bank awards and cash apps. Lastly, aim to keep your checking account lean, and move any excess funds to a high-yield savings account where they can better grow.

Following these tips can help you make the most of your banking experience and keep you on track toward your financial goals. In summary, bad banking habits can cause unnecessary fees and complications that can hold us back from achieving our financial goals.

To avoid these pitfalls, it is important to seek out banking options that best suit our needs and take the time to read the terms and conditions of our accounts. Conducting an annual check-in, taking advantage of online banking tools, and moving excessive funds from checking accounts to high-yield savings accounts can also help us optimize our financial situation.

By making these small adjustments, we can better position ourselves to take control of our finances and avoid any stress or limitations that may arise from bad banking habits.

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