Banking Basics
By Bryon Zirker
1. Putting your money in the bank is safe.
Banks are some of the safest places to put your cash and the
accounts insured to $100,000 per depositor by the Federal
Government.
2.The convenience of a bank account costs money.
Lower rates should be expected on interest bearing bank
accounts. The rates are mutch lower than securites accounts
that offer checking accounts and usually do not keep up with
inflation. Fees can easily be as much as $200 dollars per year
unless minimum balances are kept on deposit.
3. The main enemy of a bank account is inflation.
Even when inflation rates are at their lowest they are usually
higher than the interest earned in a typical bank account. The
increase in the cost of goods and services usually stays ahead
of what banks pay in interest.
4.Interest rates can be misleading.
Different methods for calculating interest rates are used by
banks. Make sure to use the "annual percentage yeild"
calculation for each account. The APY is calcualted the
same everywhere.
5. So you want better rates?
You can ask the bank about certificates of deposit (CDs). These
offer garanteed rates and are insured to $100,000. The downside
is that they require a minimim of three months up to five years
or more that the mony is locked in. If interest rates fall the
rate is garanteed. If interest rates rise above the CD rate
then the money is not using its full earning potential. Lastly
if you remove the money early there is usuall a penalty for
doing so.
6.Watch out for ATM fees that bite.
ATM machines are a nice convenience however the rates can vary
from $1 to $2. Keep an eye on these as they will no doubt
increase more. You could end up paying from $3 to $4 fora transaction
if your bank charges you and the ATM location charges you.
7. Interview different banks for the best deal.
Comparison shop different banks and ask about price breaks. A bank
may allow a discount if you maintain a certain deposit amount.
Free checking might require that you become a share
holder or use direct deposit for your paycheck.
8. Look for bank services on the internet.
Compare yeilds and fees on the internet. Find out minimum
deposits and requirments nationwide. Check CNN/Money in the
banking section. Use a search engine to find a bank by putting
the name in the search window.
9. Bill paying is much faster and easier online.
Paying your bills online is a very good way to save time and
headache of writing checks and licking stamps. When you combine
online banking with a good finance management program you will
have the ability to connect your budgeting and financial
planning with your banking.
10. What, bankless banking!
There are accounts offered by some financial institutions that
look like bank services. Credit Unions, brokerage cash-management
accounts and mutual fund company money market funds are the
most common.
posted by Bryon Zirker @ 9:45 PM
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