It’s an exciting time to be out on your own and open your first checking account. Your checking account becomes the home base of all your finances. Here you can set up automatic payments, direct deposit, automatic transfers, and much more. If you’re opening up your first checking account or have had one for years but never took the time to explore it, here are eight helpful tips for getting the most out of your money.
1. Set Up Alerts
The more you know, the more you’re in control. As soon as you open an account, set up alerts for anything you think might be important. This way, you’re always aware of any activity in your account. Alerts are especially helpful if your balance is getting low, as the last thing you want to do is overdraft your account.
You can also customize your alerts so that you’re only being messaged for activities you care about. Customized alerts can let you know whenever your balance is below a certain threshold, which helps to keep you in control.
2. Automate Everything
Taking advantage of automation makes your life so much easier. Direct deposit from your employer is a no-brainer, as it will save you a trip to the bank every two weeks. The savings on gas alone will make direct deposit worth your while to set up.
You can also automate payments to businesses through your checking account. If you have a big bill that needs to be paid, rather than using a check that you had to pay for, putting it in an envelope, and licking a stamp, you can have your bank send the money straight to the business.
3. Go Paperless
Going paperless is an absolute must. Now, some people may enjoy seeing their statements every month to go through each transaction and make sure that everything looks right. But you can do that from your phone, or your computer, at any moment. Also, what are you going to do with all those bank statements? You’ll run out of cabinet space eventually, or you’ll have to shred them. Lastly, getting mail from the bank is never fun. Save yourself and your mailman the hassle.
4. Avoid Fees
Some banks will charge you a fee if your account goes below a certain number. An example of this is certain Chase checking accounts, which will charge you $12 if your account goes below $1,500. And it only has to dip below that number for one day for you to get charged. To avoid this, you can set up an alert for a higher amount, such as $2,500, to make sure that you never go below the threshold. Or a better idea is to choose a bank that has no account minimums.
Another no-brainer is using your bank’s ATMs. Using an out-of-network ATM is like lighting your money on fire. It will cost you two to five dollars per transaction and sometimes double that if your bank charges you a fee on top of the ATM fee. Sometimes you may think you don’t have a choice, but if you choose a bank that has many ATMs in the area, you should always be able to find one nearby.
5. Don’t Use Your Debit Card Too Much
Unless you get points or cashback on a debit card, there’s no reason to use one rather than a credit card. And even if you do get points on your debit card, your credit card still likely has better rewards. As long as you aren’t spending frivolously, you may as well take advantage of your credit card rewards.
This tip comes with a caveat. It has been shown that using a credit card will lead to people spending more than if they were paying in cash. But a swipe of plastic is a swipe of plastic, no matter if it’s credit or debit. With both, it’s hard to track how much money you’re actually spending.
The suggestion of using your credit card instead of your debit card only applies to those who regularly pay off their full statement balance each month. If you have trouble paying off your credit card, try paying for everything in cash. When you pay in cash, you feel the pain of spending, and it will cause you to spend less.
Using your debit card can also get you into overdraft trouble. It can be easy to swipe too many times on a debit card and find that you don’t have enough funds in your account, which will lead to an overdraft fee.
6. Don’t Automate Too Many Bill Pays
Along the same lines as not using your debit card, if you’re paying regularly scheduled bills through your bank account, you’re forgoing the cashback and rewards that you could be receiving if you instead automated those payments through a credit card. Of course, you don’t want to automate too much on one card if your limit isn’t very high. But you’re leaving money on the table if you choose to automate with your bank account.
Automated bill pay can also be confusing because you may have a pending payment that could cause you to think you have more money in your account than you actually do. As long as you always pay your credit card on time, keep things simple and take advantage of those rewards.
7. Deposit Checks in your Mobile App
Mobile deposits are one of the greatest modern innovations in banking. Instead of having to get in the car, drive to the bank, and wait in line, you can take a picture of your check and deposit it instantly. You’ll want to hold onto the check for a couple of days until your bank has confirmed the transaction, and then you can shred it. Some banks make copies of all your checks. But not all do, and by making a mobile deposit, you always have a record of the check.
8. Choose a Bank with a High-Yield Savings Account
When you’re a pro at managing your checking account, you’ll probably have extra money that would be better off earning interest rather than just padding your account. Most banks make it easy to set up automatic transfers to a savings account each month. And while this is useful on its own, it’s a lot less valuable if the savings account is offering a 0.01 percent interest rate.
Instead, you can park your money in a high-yield savings account that can offer around 2.0 percent interest. You can still take advantage of a high-interest savings account even if it’s from a different bank, but it’s much easier to manage your finances when they’re all in one place. If you have $10,000 in your savings account, that’s close to $200 that you’d be leaving on the table if your bank offers reduced interest rates.