Does Your Bank Love You?
by Galia Gichon, Ladies Who Launch member, New York City
illustration by Barbara Hranilovich
Banking is such an integral part of our daily financial life. Yet, most people don’t take advantage of the benefits their bank can provide. In addition, you may be spending too much in fees—quite possibly hundreds of dollars a year—that can easily be eliminated.
Let’s start with the ATM. While the convenience is undeniable, the ATM can also be a big source of wasted money thanks to withdrawal fees. If your bank does not have a cash machine near your home or office, consider changing banks. At the same time, manage your ATM visits. Plan how much cash you will need on a weekly basis and don’t visit your ATM more than once a week. You will actually have more money left over at the end of the month.
Even if you are someone who is already banking online, are you taking advantage of all the features online banking offers? For example, you can set up automatic payments to prevent late fees and use this feature to pay down your mortgage faster as well. Even if it is only $25 or $50 a month, you are building equity faster. The main reason online banking is so useful is that you will become more organized. You will pay your bills in much less time, know what checks have cleared, be up-to-date on your current balances, and manage more than one account. Any tool that saves you time and gives you more control over your money is a must-have. If you tend to pay your bills late, online banking will also help you because you can set up recurring payments. Try paying your bills every week; it should only take you 10 minutes. You will never pay bills late anymore and you’ll have much more peace of mind. If your bank charges for online banking, you may want to change banks.
Scared of identity theft? This is the future and it is where we are going. In fact, by banking online, you are more aware of your balances and any unusual activity in your account. Stay with a large FDIC-insured bank to protect yourself as much as you can.
On a personal note, introduce yourself to your bank manager; you never know when you might need that extra help. Even in today’s high-tech society, we all appreciate that personal touch. However, your bank might not serve every need in your financial life. Think twice before buying investments from your bank. It may not be the best place to do so as their fees are traditionally higher than no-load mutual funds.
Use your bank to make your finances as stress-free as possible. It will help you become more financially healthy!
Galia Gichon is a member of the New York City Incubator and runs Down-to-Earth Finance.
Geezeo.com (one of my clients) provides a free, secure place to access multiple bank accounts/institutions in one place. You can also use your phone to check your bank balances. Check out Galia’s interview at Geezeo, here!
I love online banking. It is the clearest way to see what’s going on right now, and if there are any problems, I get to them immediately. I can keep track of every dollar that goes out and comes in, and there is no longer any doubt about whether things have been paid or not. I love the automatic payments and I also like the instant transfers. No paper banking is the way to go. I don’t worry about security because there are so many checks in place today. If you’re not already banking online, then switch. You’ll also save a few trees!
This article over simplifies how banking works, and I completely disagree with the advice to “stay with a large FDIC-insured bank to protect yourself as much as you can.” Here is why:
- Large does not necessarily mean better or safer technology. Many banks (including the largest and the smallest) use the same vendors for providing online banking solutions. The only difference is the customized interface.
- Large does equal safety & soundness. Check the financial condition of all insitutions, big or small, before putting your cash there. Many times your money is just as safe with a regional or community bank as it would be with the largest U.S. banks.
- The FDIC insurance rules are totally different now (which, out of fairness, were changed after the date of this article). Non-interest bearing accounts, NOW accounts, and IOLTA accounts have no limit on FDIC insurance. The key is to call your banker and ask them if your institution is participating in the program and how you & your money are protected. There are many ways to structure accounts to fully insure your funds (both non-interest bearing and interest bearing).
- The benefits of smaller institutions far outway that of large banks. Most community banks allow you to use any ATM machine worldwide and no charge, and will actually reimburse you any charge incurred from the other institution. At a community bank you are far more likely to have a one-on-one relationship with someone who manages your account vs. an 800 number and a computer screen. In instances where you over-draw an account or mail a payment late you can call and have the charges easily waived/reversed.
As a long time banker, the best advice I give to my friends and family is this: know your banker (not just your bank). Find out who your relationship manager is and ask her to coffee. Then when you have an issue, you’ll have someone to call…just like everything else in this world, at the end of the day it is who you know.