Pay Less for Banking & Loans
Seven ideas to keep more in your bank account.
From Kiplinger's Personal Finance magazine, March 2009
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1. Bye-Bye, Late Fees: Millions pay credit-card late fees of as much as $39 each month. Use an automatic debit to make payments and you'll never be late again.
Annual Savings: $234
(eliminating six late fees a year )
2. Wipe Out Interest: The average household has $7,430 in credit-card debt. But let’s assume you have just half that. Take advantage of a 12-month 0% balance-transfer offer from Bank of America or Discover.
Annual Savings: $422
(on a rate of 13.6%)
3. Stay in-Network, Nix ATM Charges: Each time you use an out-of-network ATM, you pay an average of $3.43. Avoid charges by selecting a bank like Citibank, with more than 23,000 fee-free ATMs.
Annual Savings: $178
(based on one fewer out-of-network ATM withdrawal per week)
4. Get Free Checking No Minimum? No Matter: Brick-and-mortar banks charge an average fee of $12 per month for checking accounts and require an average minimum balance of almost $3,500 to avoid it. If you use direct deposit or make five or more debit-card purchases each month, Chase offers a free account with no minimum balance required. Or bank online at Salem Five Bank, pay no monthly fees, and earn 2.75%.
Annual Savings: $144
5. Use Cash-Back Cards Savings Really Add Up: Tired of accruing airline miles that you can never redeem? Switch to a cash-back credit card and earn enough in a year to pay for a coast-to-coast ticket. If you spend $850 a month for 12 months using Blue Cash from American Express, you could see a $250 credit on your bill at the end of the period. Even charging $550 a month on basics such as groceries, gas and drugstore purchases can put money in your pocket.
Annual Savings: $250
6. Bounce No More Sign Up for Free Alerts: The average bounced-check fee has increased 34% over the past ten years and is now $29, according to Bankrate.com. If you never balance your checkbook, sign up for your bank's free alerts to warn you if your balance drops to the preset amount of your choice. Need a safety net? You can get overdraft protection. Just be sure you know how much you're paying for it.
Annual Savings: $174
(six fewer overdrafts per year)
7. Refinance a Mortgage: Monthly mortgage payments take up the lion's share of most household budgets, so refinancing can produce substantial savings. With the interest rate on a 30-year fixed-rate loan at less than 5.5%, now is a good time to refinance.
Slashing your rate from 6.75% to 5.25% on a 30-year loan will save you 17% on your monthly payment. On a $200,000 mortgage, that translates into a savings of almost $193 per month. For your own situation, use the How much will my payment be? calculator at Kiplinger.com. Of course, for a refi to pay off, you must stay in the house long enough to recoup any closing costs, which typically amount to 2% to 4% of the loan.
Annual Savings: $2,313
(refinancing a $200,000 mortgage)
TOTAL ANNUAL BANKING SAVINGS: $3,715
Slideshow: Top Savings Tips for 2009
Save $50 a Day
Pay Less for Banking & Loans
Pay Less for Health and Insurance Costs
Pay Less for Utilities
Pay Less for Food
Pay Less for Transportation
Pay Less for Investing Costs
Pay Less for Leisure
Pay Less for Must-Have Trends
PLUS: How These Super Savers Do It
Reader Comments (4)
Posted by: Ginger at 02/24/2009 11:29:35 PM
I'd just like to comment that refinancing the above loan ($200,000) at the lower interest rate causes you to pay MORE in interest over the long term if you have less than 22 years left to pay. The reason is that even the lower interest generates more payment out over the life of the loan than your higher interest rate over a shorter period of time. The additional interest can actually be significant even when lowering your interest rate. So, calculate & research carefully!
Posted by: JOE D at 02/26/2009 02:29:31 PM
REVERSE MORTGAGE
Posted by: Eric at 02/26/2009 02:51:45 PM
I Love #1, but if you are not careful, it can cause #6 to double! The best is to set up a new account for auto payments ONLY and direct deposit the monthly amount needed into that account. Don’t use it for anything else and adjust up or down as new auto payments are added or paid off! (Start with a $100 balance or add an extra $5 from each direct deposit to build a little buffer for accidents!)
Posted by: linda at 09/11/2009 12:36:36 PM
The headline promises that I can "Save $50 a day" -- but what if I've already done those things? I've reduced my interest rate to zero by paying off my mortgage and haven't paid late fees, NSF charges, credit card interest for decades. What these suggestions really amount to is "Keep from wasting $50 a day."