If you answered the latter you need to change banks or behaviors. Your bank should absolutely be paying you and not the other way around.
Gone are the days of monthly fees just for the pleasure of having an account. Credit Unions and many other national banks offer no fee checking/savings/money market.
When Lauren and I first got married we had accounts open at different national banks. We wanted to merge our finances but we both liked our banks. (Banks are really good marketers) So we kept all the accounts open but just added each other to our accounts.
It seemed convenient because we could use the different accounts to save for and manage different things. Like one account for vacation money and another for an emergency fund. We / I was wrong, it was super confusing.
BUT the bigger issue came up when we started getting statements in the mail. (THE MAIL, It was 2008 don’t laugh) I noticed that all of her accounts, 2 checking and 2 savings, were charging $8 per month. My bank had never charged me like that.
I read the fine print and found out that if we didn’t carry a certain balance, plus have a direct deposit coming in each month, plus some other factors they were going to charge us the fees. Insane… why would I pay $32 per month just to have accounts open?
Meanwhile the bank was paying us $0 on our checking and less than 0.20% on our savings. This was a great deal for the bank. (Check out your bank’s savings rate. I bet it’s like 0.05%, YUCK! And they collect BILLIONS in fees every year from consumers)
So I did some research and found a local credit union that offered no fee checking and savings AND they paid over 5% interest on your first $1000 in the account each month.
…Hang on a minute and near the end I will recommend a couple good banks to check out…
So we switched all of our accounts over. My bank wasn’t really any better than the one my wife had been with anyway. NOW WE WERE GETTING AT LEAST $50 PER YEAR FROM OUR BANK vs PAYING $384 to our old bank and getting almost nothing in return.
These aren’t life changing numbers I get that. But it’s a $434 difference every year and $36 per month. $36 is most of a tank of gas for us. That’s a big deal.
I hear you asking; “Switching banks is hard though right.” Not really. In the digital age setting up accounts and transferring funds takes almost no time at all. Just make sure you don’t forget to switch your direct deposits and recurring charges. I admit depending on your situation that can be a little time consuming, but it’s a one time thing…
AND YOU WILL GET AN EXTRA $36 PER MONTH IF YOU ARE LIKE US. And I am betting if not it will still be close.
If your boss offered you $434 extra per year on top of your raise would you be happy? ABSOLUTELY.
So this brings me to today. I am working on my taxes and I looked over my interest statements. We have our emergency fund in a money market account making over 2% per year and that same old credit union for our checking and regular savings. And the total for the year was $320 paid to us in interest!
I paid ZERO dollars in fees all year and got $320. That is how it should work. You are giving money to your bank. They should pay you the interest, not the other way around.
When you borrow money they absolutely charge you for the privilege. Make sure you are charging when you give them your money!
(For my taxes I have used HR Block the last few years and its worked great. If you haven’t started yours yet here is an Amazon link with a 5% Bonus.)
H&R Block Tax Software Deluxe + State 2018 with 5% Refund Bonus Offer
So where are some of the best places to bank? Here are some of my favorites:
Banking Services
Local Credit Unions: Banks are for profit so they have to find ways to make extra money. They are responsible to their owners/shareholders. Credit Unions are generally not for profit. They are responsible to their members.
When you sign up at a credit union you become a member. All of the members are pooling their resources to form a union. That union provides banking services and credit to its members.
Because the Credit Union is responsible to its members and not to shareholders it returns the profits to you, the member. It does this by paying higher savings rates and having generally lower interest rates on mortgages or loans. (Avoid Loans Though – Check this article out to see how you can)
Not all credit unions are equal though so do your homework. They also are not national for the most part and are not federally guaranteed to the same maximums as national banks in some cases. But most of us aren’t putting hundreds of thousands of dollars in our checking/savings so that really shouldn’t be a major factor. In case you are nervous about travel: We have been with ours for almost 10 years and have never had an issue when we are traveling.
Savings & Emergency Funds Investing
Capital One 360: They offer a fee free Money Market account that pays 2% apy, as of this writing. They are FDIC insured. To get the 2% you have to have a minimum of $10,000 in the account each month. So it’s perfect if you have an emergency fund around that amount. Full disclosure, I personally have a Capital One account and love it.
Synchrony High Yield Savings: This is a fee free savings account that pays 2.2% apy, as of this writing. It’s also FDIC insured and there is no minimum balance requirement. So if you are just getting started on that emergency fund or if you need a place to save up for a large purchase this could be a great option. They are online only though and do not offer checking account options.
Citizens Access Savings Account: This one has one of the best interest rates out there right now at 2.35%, as of this writing. The minimum deposit requirement is $5000, its FDIC insured, and no fees. They advertise 5 minute sign up as well.
One of these options might work well for you, check them out. The point here is that banks have done a really good job marketing to us. They are so good at it that we build loyalty to them.
Think about that for a second. We get so loyal to a company, not a person, a company, that we are willing to; 1. Give them our hard earned money. 2. Pay them fees every month to hold it for us. 3. Get virtually zero in return.
That is craziness. Stop the cycle. Your bank should be working for you. You are the lender, they are the borrower, and they should be paying you.
Like I shared before this isn’t life changing money. But winning with money is about thinking differently and behaving differently in our everyday decisions, not just the big ones. If you can make a switch and make a $400 turn around this year that is so worth it.
A few small decisions like that make paying off your debt easier, saving for that vacations easier, and investing for your retirement easier. Take the time to do it, it’s worth it and tomorrow you will forget.
If you are already crushing it when it comes to avoiding fees and getting great interest rates, Awesome! You are on the right path! Encourage others and share what has worked for you.
Join us on the journey, enter your email below so that you won’t miss another post.
