Banks are in business to make money, just as you are, and today’s tough economy is causing them to look for ways to take a bigger bite than ever out of your bottom line. Following are seven costly banking errors and how to keep them from chipping away at your net income.
Failing to steer clear of increasingly oppressive bank charges. One technique most banks are using to beef up their bottom lines is increased service charges. If you allow yourself to get careless and bounce a check, you’ll likely get hit with an overdraft fee, one of their most profitable ploys. Most banks now automatically enroll their checking account customers in an overdraft program that allows them to hit you with a charge of as much as $35 every time you write a check for more than your account balance. Some banks set no limit on the number of overdraft charges that can be accrued in a single day, so a little carelessness on your part could cost you a bundle.
Leaving an inviting paper trail Identity thieves and scam artists are lurking everywhere these days, and people who are careless with banking documents are one of their favorite targets. Leaving old bank statements, voided checks or other documents where they may be found makes you an easy target for the bad guys. Every one of your old bank documents should be shredded. Shredders are now inexpensive enough to make them a wise investment.
Using a weak online password. Online banking is so convenient and easy these days that many consumers now prefer the speed and convenience of doing their banking on the Internet rather than visiting their local branch. Although most experts agree that online banking is as safe—perhaps even safer than conventional banking—it’s important to be cautious about your online password. Resist the temptation to use something as simple as your birth date. Use a combination of letters and numbers chosen at random, and never do your online banking from a public computer.
Overlooking the dangers of ATMs. Crimes involving ATM users are growing nationwide. When you use an ATM, it’s important to take basic precautions to protect yourself and your money. Stay aware of people around you and make sure that you shield your personal identification number (PIN) when you’re typing it in to the machine.
Failing to check with other banks for the best interest rate. The banking industry has become very competitive in these difficult times. The result is a wide variance in such things as interest rates on loans. Always shop around for the best interest rate; there are many other places, especially online, that offer attractive deals whether you are saving or borrowing.
Opting out of paper statements. You’ve probably noticed those inviting suggestions from your bank that you opt out of receiving paper statements each month. It’s a good idea for the bank because it saves them time and money, but it may not be a good idea for you. It can be much easier to spot irregularities when you examine your paper statement each month than it is on a website, and banks can and do make mistakes.
Avoiding a personal relationship with your branch manager. If you want to be sure that you’re getting the most favorable treatment from your bank, it’s important to establish a personal relationship.
Don’t hesitate to ask for a meeting with your local branch manager to introduce yourself. Tell the manager a little about yourself and your business. When it comes to straightening out a problem or asking for a loan or other help, there’s no substitute for being personally acquainted with the powers that be.
William J. Lynott is a veteran freelance writer who specializes in business management, as well as personal and business finance. His work appears regularly in leading trade publications and newspapers, in addition to consumer magazines such as Reader’s Digest, AARP Bulletin and Family Circle.