With the economy in the tanks and headed lower by most honest fiscal forecasters, saving money has become the new national pastime in the US. While those frugally minded individuals who have been honing their skills over the years by finding the ways that suit their lifestyle while living on as little as possible, the role call for those interested in frugal living continues to grow. This is a good thing, but for the old hands out there, it seems like there are too many cooks and the broth is about to spoil. The biggest problem that most frugal neophytes have is debt and banking ignorance. There are a few things that should be avoided in order to keep you account in the black and not be wasteful. Staying away from high risk rip off areas is top on the list for the neo-frugally minded.
Credit Card Rip Off
Credit cards are one of the biggest problems for the average American family. People tend to over use credit cards and make purchases they cannot afford. The best thing to do is live within your means. This equates to only buying things for which you have the money. If you don’t have the money, then you shouldn’t buy the items. The only logical case for a credit card would be for emergency situations, like mechanical breakdowns, or during travel. Once could make the case of using a credit card to earn reward points, but this will require strict discipline in order to keep the fees and costs to a minimum.
Banks are notorious for charging fees upon fees upon fees for credit cards. Even with the new credit card legislation, you will see cards that will charge an annual fee unless you spend a specific amount over the year. If you absolutely must have a credit card, then look for a true no annual fee credit card with a low interest rate. Otherwise, cut all your cards up, don’t use them and pay off what you have on them as quickly as you can. They are a rip off, even at 5%. Compound interest is a powerful money-sucking tool that banks will use to rip you off.
Banking Error Rip Off
Keep a close eye on your accounts. Banks are notorious for making ‘errors’ in their favor all the time. They charge you a fee if you make an error, but if they make one, then you are expected to ‘grin and bear it’ without so much as a whimper. If the bank makes an error, and you are keeping a close eye on things, then you will catch it quickly and be able to act appropriately. Their errors lead to fees that you are charged. At the very least you should make sure that you are not charged any fees from the bank for their ‘error’. You should also make sure that they pay for any fees that you might be charged by other companies for the bank’s ‘error’. You should expect them to compensate you if your account is negatively affected by their ‘error’. Ask for them to do something to make up for their mistake. All they can say is no, but you might be surprised what they will do to keep a customer.
5-7 Day Wait Rip Off
Many banks will make you wait a period of 5-7 days for deposits that are not cash. This could include money orders, personal checks and out of town or out of state checks. What really takes place in many situations, is the bank deposits the ‘funds’ in their private accounts and are earning interest for that 5-7 wait. While the interest earned on your check for $500 might not be more than a penny or two, if they do this nationwide, and these deposits are closer to $5,000,000 they can earn substantial amounts of interest that shouldn’t be theirs. It should be their account holder’s money. It’s a rip off. If your bank or credit union does this, find another financial institution that doesn’t and switch your accounts.
Rearranging Transactions Rip Off
It isn’t uncommon for banks to change the order of transactions. Not always do the transactions occur in the order in which they were made. For example, you account is $100 you write three $5 checks and two $2 checks in the morning and then one $90 check in the evening. Banks then re-arrange the order of the checks placing the largest amount first. This way they can charge you for three NSF fees instead of one! If you pay close attention to your account balance, you should never write a check without knowing the total amount in your account.
Allowing NSF Debit Card Charges Rip Off
This rip off is one that amazes me. In the age of computers and information technology that is mind boggling, a bank will allow you to make purchases using your debit card when you do not have the funds in your account to cover the purchase. Then, they charge you an NSF (non-sufficient funds) fee! They have the ability to deny the transaction at the terminal when you swipe you debit card. This practice is unethical. Check with you financial institution to see if they allow this to happen. If they do, ask them why and tell them you would rather have you account handled differently. If the money is not in your account, then you should not be able to make the purchase. If you allow for this type of thing, your pack of chewing gum at the corner market could cost you $30 instead of $0.50!