Friday was my last day at the Bank where I worked, so I thought I would impart some knowledge that will save you money and that the Banks’ don’t particularly want you to know. Why don’t they want you to know? Well… the more money you save by avoiding these dumb mistakes the less money they make. Here then are 10 banking mistakes I see (or more correctly saw) everyday:

1. Failing to Check the Fees Before Opening an Account

Ok, Bank’s can charge some exorbitant fees and I’m not going to try and defend them. But please please please check the fees applicable to the type of account you open before you open it.

2. Not Reading or Understanding a Loan Contract Before Signing It

I have lost count of the number of times I have received loan contracts back from clients where it is obvious they have not read the contract. How do I know? Well you would think people would be able to sign their names in the right place for starters. Now call me crazy, but before signing a contract to borrow $500,000 I would read every last word in the contract.

3. Leaving Large Sums of Money Sitting in Cheque Accounts Earning .1%

Suppose you have a low average of $500 in your bank account, not earning any interest. At an interest rate of, say, 5% a year, you would earn an extra $25 by the end of the year. This may seem a trivial sum, but many people I see have much larger average balances and pass up the opportunity to earn several hundred dollars a year in interest. ING are well known for their Online Savings Accounts that pay a healthy rate of interest, but (as per by next point) there may be a better account for you in your particular part of the world.

4. Not Shopping Around For A Better Deal

Competition is fierce in the modern world of banking. Deregulation has brought many new players to the floor and the goods news for us is there are some great deals out there. Online savings accounts that pay a high rate of interest, low rate no frills credit cards, and home loans with a variety of features are just some examples. Don’t simply stick with the same bank because they gave you your first piggy bank at age 5. Shop around and get the best deal for yourself.

5. Failing to Check the Bank Statement Each Month

Once when a customer asked me to print a bank statement for him I told him that it was only a week since he had been sent one. He replied: “I know, I threw it straight in the bin.” Now I know bank statements are about as fun to read as the business section of the newspaper, but I suggest having a quick look over your statement to make sure there are no fees that have been incorrectly charged (yes, mistakes do happen).

6. Paying the Credit Card Bill Late

I have said it before, and I will say it again: credit cards are nasty little things. Sometimes all it takes is a payment 1 day late and you get slugged with a $30 late payment fee. To avoid this I suggest setting up an automatic payment for the bill, or making a note in your diary (or some other similar method) of when the payment is due.

7. Only Making the Minimum Repayment on a Credit Card Bill

Sometimes paying the minimum amount is unavoidable (life happens, right?), but if you are continually doing this then it ain’t good. The interest rate on credit cards is typically very high and if you continue to pay just the minimum (usually about 2%) then it will take about 999 years to pay off. Ok… 999 years is an estimate but I can assure you it will be a long long time!

8. Being Complacent When Banking Online

Online banking is fantastic and I almost called this mistake “Not Banking Online” as you can save a lot of money by doing your banking this way. Even dumber, though, is being complacent with your online banking security information. Generally Internet banking is safe, but I have had one customer of mine cleaned out. Make sure you have a good, up-to-date antivirus and firewall. Also, I suggest not doing your online banking from a public computer unless really necessary.

9. Making Loan Repayments on a Monthly Basis Instead of Fortnightly/ Bi-Weekly

Paying fortnightly (or bi-weekly as it seems to be called elsewhere) instead of monthly saves you money. I’m too lazy to explain why - if you want to know the mechanics you can read this article or, if you still don’t trust me, this one.

10. Borrowing Too Much Money

If a bank ever approves you for a credit card limit or loan amount that makes you think ‘Wow, that is way more than I expected to be able to borrow’ I suggest you take notice of that little voice. Being buried up to your eyeballs in debt often leads to stress, unhappiness, and strained relationships. In this consumeristic age the motivation behind many purchases seems to be impress others. Sure it is nice to buy beautiful things, but before making any big purchase ask yourself if you can really afford it and is it worth the extra financial pressure.

Tags: Money //