Money is tight these days. Last year, U.S. civilian compensation rose by just 1.9 percent. Interest on most savings accounts is well below 1 percent. In this environment, where can a person come up with a little extra money?
One answer is to squeeze more out of your bank. Too many Americans simply fail to optimize their banking relationships, but with a little effort, they could get more out of their bank accounts. None of the steps outlined below is particularly complicated or revolutionary, but if you follow them it should help add a little something to the meager
and savings account rates Americans are facing these days.
1. Shop for better interest rates
When people look at small numbers, there can be a tendency to feel they are all pretty much the same. For example, it might be easy to choose a bank offering 4 percent on savings accounts over one offering 1 percent, but would you feel as strongly about getting a 0.8 percent savings account rate instead of 0.2 percent? The fact is though, even on a smaller scale, both differences amount to getting four times more dollars in interest than the lower-rate alternative. Even with savings account rates averaging next to nothing, you can get rates that are close to 1 percent, so why not insist on that?
2. Insist on free checking
has practically been labeled an endangered species since the financial crisis, but it still exists. If some people are still getting free checking, why shouldn't you?
, and you should be able to find a free checking account in your market.
3. Consider online banking
One of the best ways to find higher savings account rates and free checking is to look at online banks. Because they don't have extensive branch networks, online banks have cost advantages over traditional banks that make it easier for them to offer higher savings account rates and lower checking account fees. This advantage seems to be growing over time.
4. Opt out of overdraft protection
Paying $30 to overdraft your account by $10 is a huge financial mismatch, and some people make this mistake over and over again. Overdraft protection may do more to protect the bank's profits than it does to protect you, so consider opting out of these programs.
5. Use the right ATMs
Using an ATM other than one in your bank's network may only cost you a couple dollars each time, but as a percentage of the money you are drawing out, that can be huge -- a $2 fee on a $20 withdrawal means you are paying 10 percent just to access your money. Choose a bank with ATM locations that are convenient for you so you can
avoid this expense
6. Ask for more
In every conversation you have with your bank, find out if there is more available to you -- special savings or CD rates, rewards programs, etc. You only have to be right once to make money out of this habit.
These may seem like small steps, but in a way, that's the point. These are relatively easy actions that should continue to produce results for you once you take them. In that way, these small steps can add up to a significant amount of dollars over the years.