Interest rates are one major reason why people continue to move their money out of a checking account and keep the balance low. In general, checking accounts do not give a lot of interest to the clients of the bank. Alternatives include the savings account, certificates of deposit, and stock securities.
Having little money in the checking account causes people to run into two major problems. The first is that for very low balances, some banks charge a substantial maintenance fee. The amount for any single month may not be high, but added up over 12 months in the year it can be significant.
Another problem is what happens when the bank customer writes a check for too much money or tries to pay with money he or she does not have in the checking account. If the account falls into negative territory even briefly, the bank will make an emergency loan but charge very high penalties and rates for it.
Congress passed a number of finance-related laws which curbed the ability of banks to enroll all customers in these fee-generating schemes. The primary effect is to reduce the amount of unreasonable fees. The secondary effect is more pernicious as it raises the cost of having an account at a bank, as well as increase the number of situations where the customer must deal with bounced checks and high penalties.
One can reduce the chances of overdrafts merely be reducing costs. If you possess a job that is considered a low risk, it may save you some money on your health insurance. Some fairly “safe” jobs are teaching and accounting so if you own this sort of job, you may be able to get lower costs on your health insurance. Nevertheless, your month-to-month health care subscription can be daunting.
Another cost to consider is when you buy large appliances. It takes a lot of money not just for the initial purchase but also for subsequent maintenance. Every consumer website will advise you that it is vital to look up the energy star ratings and energy needs of an appliance prior to investing in it. Over a year’s time, a buyer could save a lot of cash.
Readers wanting to know more can head over to learn about check register. Niche resources on finance advisors are free for your perusal.
- Certificate of Deposit in Personal Banking (visualeconomics.com)
- Look Out for Changes to Your Bank Accounts (getrichslowly.org)
- Nine Ways That Being Frugal Can Cost You More (dailyfinance.com)