Top banking mistakes that can ruin consumer finances

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Top banking mistakes that can ruin consumer finances

Even the finest of us make mistakes. We all make blunders from time to time, whether it's missing your phone or offending your spouse. We can only do our best to stop repeating the same errors over and over again.

But saying it is easier than doing it. Some mistakes are simple to replicate, and many of us, sadly, make them again. On the other hand, others can be prevented with a few minor adjustments.

Initially, we must first identify the mistakes and avoid them. Below are 10 top banking mistakes consumers should avoid protecting their finances.

Depending on their old or current bank

When some people buy goods or services, they perform extensive research to ensure that they get the most significant value available. However, most people still prefer the same bank that they used to create their first account when it comes to banking.

That isn't always a negative thing. But if you don't compare its bank account fees and loan interest rates with other banks, you may be skipping out on the opportunity to keep more of your money or increase your savings faster.

Look into other banks to check if you can get a decent offer. Call your bank for extra information if you're unsure about the interest rate on your bank account or the APR on your loan.

Paying high ATM fees

You're probably more likely to use your debit or credit card than withdraw cash. But when you withdraw money, make sure the ATM is part of your bank's network. Using other banks' ATMs may cost you withdrawal fees.So, withdraw cash out of your own bank's ATM to avoid out-of-network ATM costs. You might also wish to look for a bank that offers no-fee checking accounts.

Paying overdraft fees

If you're constantly hopping from paycheck to paycheck, avoiding overdraft fees may be more complicated than you think. On the other hand, overdraft fees can quickly become a financial burden.

In general, you may avoid overdraft penalties by ensuring you have enough funds in your bank account. You can request overdraft protection from your bank, but you'll almost always need to open a savings account - and keep money in it. If your checking account balance becomes less than zero, the bank will withdraw funds from your savings account and charge you a nominal fee.

Trusting only brick-and-mortar banks

Previously, only brick-and-mortar banks existed, but with the growth of the internet, various online-only banks have emerged. This new technique has both advantages and disadvantages. Because there are fewer workforce and physical locations to pay for, online-only banks have lower overhead. Due to this reason, they can provide lower interest rates on loans and greater annual percentage yields (APYs) on checking/savings account holders. These may become the two most important benefits for an account holder.

However, the lack of physical facilities might make it more challenging to seek help if you need it. Transferring cash can be complicated and require a transfer from a deposit-accepting ATM or a brick-and-mortar bank to your online account. Even if you retain some money in a brick-and-mortar bank for convenience's sake, their advantageous rates make them worth a closer look.

Not reviewing your bank statement

The most common personal banking mistake is failing to open and examine bank statements as soon as they arrive.

This is the only method to find out right away if there is a mistake in your account or if your balance falls below the minimum required to avoid being charged a fee. Find a suitable time to review your bank statement. Without knowing the actual status of your finances, you can't plan any financial strategy or set up financial goals.

Leaving a literal paper trail

You'll make yourself an easy target for identity thieves and con artists if you leave discarded bank paperwork unattended. If you make an error on a deposit slip, tear it up before throwing it on the counter or trash can. All bank papers you intend to trash should be shredded or torn up into little bits in the same way.

Using an easy password

Keeping a password for an extended period can be dangerous. Hackers are constantly attempting to rob your bank funds via hacking. If you keep the same password for more than six months, you should consider changing it once a month.

Furthermore, avoid using an obvious password, such as your birthday, year, or month. Do not write down your password anywhere, especially outside of your home.

Keeping a considerable fund in your checking account

Most checking accounts don't pay interest, and those usually pay even lower rates than others. If you store too much money in your checking account, you may miss out on the chance to earn interest in your savings. To avoid overdrawing your account, save just enough money in it to pay your essential monthly living needs plus a little extra. Put the remaining balance into a savings account. You may always transfer money back to your checking account if you need to.

Not reviewing your transactions

You undoubtedly check your credit card accounts for fraudulent purchases regularly, but you must also check your bank statements for any irregularities or duplicate charges. This could also be the sole method to find out if someone is attempting to access your bank account fraudulently. It's easier to fix these mistakes if you catch them early. If you suspect you've been a victim of identity theft, contact your bank right away if you notice any unusual activity, and check your other financial account balances, documents to see how widespread the damage is.

Banking may appear straightforward in theory, but there are numerous details to be mindful of if you wish to maximize your income while minimizing your fees. It's OK if you've committed any of the above errors. However, take action now to avoid making the same mistakes again.

Making online bank transactions using a public network

You can go online from your favorite hangout if you have access to WiFi. However, you should be cautious about making online banking transactions from a public location using a wireless service. When utilizing your router, the level of security is not the same.

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