Getting Money Wise: Tracking Bank Charges
You might think that your money is safe and sound in the bank and that all it has to do is grow on the interest. However, there really is no such thing as being a hundred percent safe these days. There are still ways to lose your well-earned cash. Each type of bank account has fees that you should always keep tabs on.
I. Current or Checking Accounts
These are deposit accounts that serve as your "money well" for things, like bill payments. You are given a checkbook for your transactions.
Watch Out For:
- Overdraft charges. Overdraft happens when you issue an amount on your check that is more than what you actually have in your account. Banks usually ask you to pay a penalty charge for this.
- Inter-branch transactions. This occurs when you deposit in another branch, specifically a micro-branch. A fee is collected for each transaction.
- Manage your checking account properly. Know how much money you have at any given time to avoid overdraft.
II. Savings Accounts
These are deposit accounts that you keep for the purpose of making your money grow. You are given a either a bankbook or an ATM card for your transactions.
Watch Out For:
- Below-maintaining-balance charges. If your money falls below the required minimum balance, banks deduct a fee from your account monthly.
- Dormancy fees. If you haven't touched your account for a considerable period (a year for checking accounts and two years for savings accounts), it would be labeled dormant, and a monthly fee would be charged.
- For ATMs, banks deduct a service fee every time you use your ATM card with another bank.
- Read the fine print. Ask questions about everything regarding your account.
- Monitor your savings. Make sure your account doesn't fall below the bank's minimum balance.
- For ATMs, limit your inter-bank transactions. It will cost you less if you transact with your own bank.
III. Credit Card Accounts
These allow you to "borrow" money from your bank at the cost of the interest charged.
Watch Out For:
- Late payment fees. These are charged when you don't pay your balance on the due date.
- Interest fees. These add up the more often you use your credit card.
- Monitor your spending closely. Exercise discipline and stay within your limit.
- Never pay late. If you can pay before the due date, it would be better.
Managing finances can be a real headache if you don't know how. Simply placing your money with the bank and then withdrawing it when you need to will not do you any good in the long term. You have to understand what privileges and pitfalls exist with your account type so you'd know what to avoid and what to maximize. You exerted effort and time earning the money you're putting in the bank. It could even have taken years for you to finally accumulate a significant amount. Don't lose a huge chunk of it due to negligence.