Banking can be complicated, with thousands of banks to choose from, each offering an exhaustive set of disclosures and fine print.
And then there are the rates and fees, all of which should be carefully considered before signing on the dotted line.
But these tips and tricks can help you bank smarter, so you can make more money and save time.
Reassess your bank
The average American adult has had the same primary checking account for about 17 years, according to a 2021 Bankrate survey.
Customers often stay with the same bank if it does not charge them a fee or if they think it would be difficult to switch banks, according to the survey.
“Just don’t fall asleep at the switch,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “The market is constantly changing with new offerings, innovative products and features that could put more money in your pocket or make your life easier. Or both.
“So it pays to have your antenna up and be on the lookout for something that’s a better deal or works better for your financial lifestyle.”
Look at the fees you pay and see if you can avoid them.
If your bank requires a high minimum balance, for example, check to see if there are high-yield online checking accounts with lower minimums to avoid maintenance fees.
These banks also typically offer fee-free ATM withdrawals, as well as large, convenient ATM networks for home and work.
Bankrate’s Best Banks of 2022 can help you find the right bank for you.
Don’t assume your bank offers the best rate
You may feel like your bank values you as a customer, but that doesn’t necessarily mean they’re paying a competitive annual percentage yield (APY) on your funds.
“It’s partly because people just assume their bank is going to do – I’ll say, ‘right next to them’, so to speak – and give them what they should be getting,” says Elizabeth Buffardi, planner Certified Financial at Crescendo Financial Planners in Oak Brook, Illinois.
The Federal Reserve raised rates twice in the spring of 2022, after holding them close to zero for two years.
Rising interest rates have prompted some banks to increase yields on their savings accounts and certificates of deposit (CDs), making this a good time to hunt for the best rates.
You can find online banks with deposit accounts that pay rates several times higher than the national average.
Don’t let a high rate fool you
The APY of an account is the rate you will earn per year if the interest is compounded.
The APY for savings accounts and interest-bearing checking accounts is often variable, while the APY for most CDs is fixed.
When shopping for an account with the highest APY, read the fine print to see how long the rate offered to you lasts.
A promotional or introductory rate may be competitive, but may only last a few months or a year.
Also check if a certain minimum balance is required to receive a given APY.
Consider a CD for a higher APY
Savings accounts and money market accounts today can earn up to around 1.15% and 1.23%, respectively. You may be able to find a better rate with a CD if you’re comfortable with locking up your money for a fixed term.
One-year CDs currently pay up to around 1.8% on a one-year CD, while two-year CDs pay around 2.5% and five-year CDs around 2.85%.
Keep in mind that a CD may have a higher minimum balance requirement than a savings account.
Also, withdrawing money before the end of the CD’s term may result in a penalty, which may reduce the interest you’ve earned and possibly some of the principal.
If in doubt, put your money in a liquid savings account or money market account instead.
Strategically plan banking interactions
Scheduling your visit to a branch for non-emergency matters, rather than just going there, can help ensure you get the help you need.
If you’re applying for a mortgage, for example, knowing that a mortgage specialist will be there when you leave can save you time. Another time-saving option is to transact online, when possible.
When calling a bank’s customer service number for routine questions, try during off-peak hours to reduce wait time.
Communicate account closure plan
Don’t assume that your bank account will automatically close an account if you write off the balance.
Contact the bank to verify that the account is properly closed. Also, it’s helpful to move all automatic bill payments to a new account before closing the old one.
The same goes for payments you receive such as direct deposit, social security, or a pension.
Failing to close an account with a zero balance could result in overdraft fees if automatic bill payments haven’t been stopped, which can ultimately hurt your credit and make it more difficult to open other accounts.
Closing an account too early could cost you dearly
Reasons for closing a bank account include moving to a new location, switching to online banking, or seeking better rates or a sign-up bonus elsewhere.
However, it is useful to know if there is a penalty for closing your checking account.
Some banks will charge you a fee if you close an account shortly after opening it.
For example, Key Bank and Regions Bank charge an early closing fee of $25 if you close your account within 180 days of opening it.
Read the fine print if you want to close an account soon after opening it. You can choose to avoid an account closure fee by waiting for the end of the designated period while opening a new account somewhere else in the meantime.
Consider keeping multiple banks
You might find the best of both worlds by having accounts in both a physical bank and an online bank.
Many consumers stick to traditional banks so they can visit a branch for in-person assistance with their banking needs.
Traditional banks may also have more robust ATM networks, giving you access to cash locally as well as across the country or the world.
A disadvantage of physical banks, however, is that they often do not pay a competitive return on deposit accounts.
It is common for a traditional bank to pay an APY of 0.01% on a savings account, while an online bank may pay up to 1.15% on a high-yield online savings account , making it a smart addition to a branch account.
Don’t forget that card you never use
You may have a credit card that goes unused for long periods of time.
A potential downside of closing such a card is that it could affect your credit utilization rate — the percentage of credit used versus the amount available — which could ultimately lower your FICO score.
But some banks will close a credit card if it is not used often enough.
One way to prevent the bank from closing such a credit card is to set up recurring charges on the card, such as an insurance payment or a gym membership.
You may also find that you don’t use your debit or ATM card often these days, as cash-only transactions are less common and debit card purchases can mean you miss out on cash back rewards. and credit card points.
Making a withdrawal or purchase once every two months with your debit card can be enough to keep the bank from shutting it down.
Keep your bank account active
A bank can close your bank account if you don’t use it often enough, and they can also charge an inactive account fee.
Policies vary by bank, but a general rule is to use your account at least once every two months.
Keep in mind that small, recurring deposits in a savings account add up over time.
If you have a bank account that has become inactive, it may have been sent to your state as abandoned or unclaimed property.
Check with the state you live in for its abandoned property policies. Provide your bank with an up-to-date address so they can contact you if your account becomes inactive or dormant.
Money in an old account may have a return that does not keep up with inflation, and it may also result in dormant or inactive fees.
Notify your bank when traveling
A declined credit card, debit card, or ATM card transaction is the last thing you need when you’re on vacation.
Each bank may have different policies, but you may want to err on the side of caution and let your bank know you are traveling to avoid transactions being declined.
You may be able to report this travel information to your bank through their app, or you can call to relay your travel dates and destinations.
Budgeting can help you save money
Knowing how much you’re spending is essential to reaching your savings goals, and a budget is a roadmap for getting there.
Creating a budget and analyzing your expenses can help you find areas to reduce your expenses, such as recurring payments for services you no longer use. Subscription fees and automated purchases can add up over time, as can annual fees.
One tool that can help you start saving on a budget is Bankrate’s Home Budget Calculator, which lets you enter your income and expenses. Budgeting apps, such as Mint, PocketGuard, and YNAB, can help automate the process.