Personal banking is managing one or multiple bank accounts by an individual. Personal banking falls within retail banking. What is retail banking? Also known as consumer banking, retail banking allows ordinary people to open an account and deposit money.
Opening a bank account was a 2019 financial resolution of many. While having a bank account is mandatory in this day and age, maintaining the account could be a daunting task for many. Banking rules are subject to changes. At times, the rules change without any kind of prior notice. Keeping a tab of all the new updates on banking rules requires time and some baseline idea of how banking and finance work.
Here are some tips to help you out with personal banking:
Select your bank carefully
Be extra careful selecting when selecting a bank. Here are some selection criteria:
- The bank must have multiple local branches and ATMs.
- It must be a national bank. National banks face less risk of liquidation because of their huge capital and high revenue.
- Check if the bank offers concessions for students, elderly and disabled people. For example, Bank of the West allows UC Berkeley students to open the account with zero monthly service charges.
- If the bank has ties with other national banks, digital and community banks, feel free to open an account there.
Not all of these criteria need to be met, the more the merrier.
Open a savings account
Some may insist you open a checking account, but we advise you open a savings account. What’s the difference? A checking is for day-to-day money transactions. A savings account, on the other hand, is to keep the money stored.
The benefit of opening a savings account is the learning curve it brings along. You learn the importance of saving as you watch your money grow. You can avoid a financial crisis. Every month, put some money into the account, it could be as little as $50. As banks allow you to transfer money from checking account to savings account, you can open both accounts and enable automatic transfer.
Understand the fees
Account holders often complain that they don’t understand all the banking fees. What’s worse is the fees are subject to change, which means additional expense without a prior notice. Here are some basic banking fees explained:
- Minimum account balance fee: This fee is applicable if the account holder doesn’t keep a minimum amount in his or her account. Normally, it ranges from $5 to $25.
- ATM fee: This fee applies when you withdraw money from an ATM, not affiliated by your bank.
- Wire transfer fee: It is the number one preferred method for money transfer globally. It comes with a fee, which ranges between $20 and $40. $20 for domestic transfer and $40 for international money transfer.
- Overdraft fee: Banks allow you to purchase stuff even if you don’t hold enough fund. Without using credit. You need to sign up for the overdraft coverage and pay a fee $30 to $40.
- Account closing fee: Not all banks have this clause, but some certainly do. These banks require you to pay a fee when you close your account.
Now you know different types of fee and why banks charge them. Account closing fee and ATM fee are hard to dodge. But hopefully, you can avoid other fee types.
Ask for a hidden fee
Banks are infamous for deliberately withholding information. They play it safe. There’s always some info which they hide until customers ask them upfront. As a customer, you need to inquire them about hidden fees.
Normally, hidden fees come with
- Extra services: If your bank is offering you an extra service, ask them whether it’s free. If it’s paid, ask them whether the fee is subject to changes.
- Additional coverage and protection: Banks sometimes offer coverage and protection for their products. For example, a customer signing up for interest income scheme getting a certain coverage. Inquire whether it’s free.
Hidden fees are a bane. Lots of customers complain about them. So, it’s wise to make things clear at the very start.
Credit card safe practice
Personal banking and credit card usage are related. Your bank will offer you a credit card. Don’t fall for it without weighing in its pros and cons and of course, without comparing it with other cards.
My advice is don’t go for a card unless you are a prime member. Prime members get a lot of additional benefits for free. When you finally get a card, stick to the credit limit. It’s better if you insist your bank to set an alert system, which will notify you once you approach your credit limit. Credit scoring has become quite tough lately. So, make sure your personal banking plan involves the safe use of credit cards.
Personal banking becomes easy when you follow the right tips. Ordinary customers fail to get a grasp of the nitty-gritty of banking. That’s why they need expert tips. The tips shared here are to make banking super easy for them.