Managing a checking account, credit cards or loans isn’t supposed to be an exercise in frustration but it can be if you don’t know what you’re doing. We’ve talked before about how buying into banking myths can cost you money and today I’m looking at four ways people make banking more of a challenge than it really is.
1. You’re using the wrong savings vehicle
If you’re diligent about saving money, the last place you want to keep it is under your mattress. That’s where banks and all the different savings products they offer come in. Choosing between a regular savings account, an online account, a money market or a CD is simply overwhelming if you don’t know what to look for. If you go with first account you find, you run the risk of missing out on a better interest rate or paying more in fees than you need to.
There’s no reason to cost yourself money when you’re trying to save and finding the right account isn’t as complicated as you think. We’ve developed a questionaire to help you pinpoint which kind of account is the best fit for your savings goals and your needs. After answering a few simple questions you’ll receive personalized banking recommendations in your email.
2. You’re settling for a subpar banking experience
Not all banks are created equally and some are better than others when it comes to the kind of products and services they offer. Unfortunately, one of the myths people buy into about banking is that switching is just too much work. If you’re sticking with your current bank because you’ve had an account there forever even though they don’t have everything you want, you’re really doing yourself and your money a disservice.
If you’re ready to move on to a better bank you don’t have to spend hours researching checking or savings accounts. In fact, we’ve already done the work for you. Our bank rankings page includes reviews and ratings for more than 6,000 banks and credit unions, along with our picks for the ones that are the best. In a matter of minutes, it’s possible to find a bank that’s got all the features you’re looking for.
3. You’re not looking for a better rate on your debt
Credit cards come in handy when you’re trying to save money by earning rewards but that strategy can backfire if you end up carrying a balance from month to month. If you’re paying 15 or 20 percent interest on your debt, you’re effectively wiping out the value of any rewards you’ve earned and making the things you charge that much more expensive.
Looking for ways to lower your interest rate so you can save money and pay the debt off faster is the logical step but all too often, people just keep paying the higher rate anyway because they think it’s too much trouble to switch.
The same goes for student loans. While federal loans tend to carry interest rates that are similar to what you’d get with a mortgage, private lenders can charge substantially more. If you’ve got multiple loans with different rates and monthly payments, consolidating or refinancing them can streamline what you’re paying and shave a little off the interest in the process. Refinancing also helps you to get a cosigner off your loans if your credit score has improved since you’ve been out of school.
If you’re not convinced that you should be looking for a better deal on your debt, running the numbers through an APR calculator can give you an idea of how much money you’re really throwing away on interest. Once you see how the cost adds up in black and white, you can look into refinancing your loans or transferring your credit card balances. If you’re not sure where to start, take a look at the cards we think are the best.
4. You’re clueless about getting a mortgage
Buying a home is a big step financially and you can’t afford to get it wrong. From knowing how much you can afford to spend to getting pre-approved for a mortgage to landing the best interest rate, there’s a lot that goes into the home-buying process.
When I bought a home, I made the mistake of taking the first mortgage loan I was offered which came with a 6.25 percent interest rate. This was on the heels of the housing market collapse so had I been a little more savvy in my approach, I probably could have walked away with a much cheaper loan. The problem was I just didn’t know how to go about finding a better rate.
If you’re considering buying a home, using a mortgage comparison tool is an absolute must. Being able to see what rates banks are offering makes it much easier to find a loan that fits with your budget so you don’t end up paying more for a home than you have to.
Rebecca is a writer for MyBankTracker.com. She is an expert in consumer banking products, saving and money psychology. She has contributed to numerous online outlets, including U.S. News & World Report, and more.