5 Ways to Waste Money in 2008.
Resolve to Waste Less: Most people resolve to save money each year. However,
they can do just as well by avoiding big money wasters. It's no surprise
that bad banking behavior can cost you a bundle, so we've compiled some of
the most important things you can do to stop wasting money.
1) Pay Overdraft Fees: One way to waste money is to get beat up on overdraft
fees. Banks typically charge $35 or so each time they cover for you. It
doesn't matter how small a transaction is -- you pay full price just to keep
from bouncing checks or having a debit card transaction denied. If this
sounds expensive, look into an overdraft line of credit. You pay interest on
the amount you borrow instead of a hefty fee for every charge that hits your
account. The savings can be dramatic.
How Overdraft Lines of Credit Work
2) Leave a Ton of Cash in Low Yielding Accounts: Your
checking account is convenient, but it probably doesn't pay
much. So why leave a bunch of cash in there? Low yielding
accounts should be for quick and easy access. Put the rest of
your money to work. Online savings accounts have proven
themselves to be competitive and easy. Don't let your money
sit and rot. Put it to work to enjoy the magic of
Online Banking 101
Compound Interest Illustrated
3) Pay Too Much for Checking: You've seen the promises for
free checking. These offers may have strings attached, but
plenty of banks give you a true free checking experience with
generous bells and whistles:
online bill pay, imaging,
checkbooks, debit cards, and more. These days you can
even earn a competitive rate on balances that you can access with a debit
card or online bill pay service. Instead of paying for checking, you can
actually get paid for checking at some of the online banks. Check them out
and check into the 21st century.
ING Direct's Electric Orange (with overdraft line of credit)
HSBC Free Checking
4) Ignore FDIC Limits: 2007 has been a rough year for the banks. "Subprime"
became a household term. A liquidity crisis has folks worried, and we'll
hear about this well into 2008. We saw NetBank fail, and there may be more
(bigger) names to come. FDIC insurance only works up to certain limits. If
your accounts are not fully protected, take steps -- such as spreading
your money around -- to get under the limits.
What is Subprime?
FDIC Deposit Insurance
5) Ignore Your Credit: Getting a loan costs money. We know that we'll have
to pay, but we don't always realize that the amount we pay is negotiable.
One of the most important ingredients in a loan is your credit. You need
good credit to get favorable loans, and you may even need it for
insurance, a job, and more. With the recent credit crunch, some borrowers
can't get a loan at all because they don't meet minimum credit standards.
Therefore, it's more important than ever to understand, monitor, and
manage your credit.
Viewing Your Free Credit Reports
About.com's Credit Site
Insurance Scores FAQ.
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