Financial Fresh Start

Your Five-Step Plan for Adapting and Prospering in the New Economy

 Financial Fresh Start

Author: Shari Olefson
Pub Date: February 2013
Print Edition: $26.00
Print ISBN: 9780814432297
Page Count: 320
Format: Hardback
e-Book ISBN: 9780814432303

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Banking Smarts in the New Economy

Banking Smart in the New Economy

Tips for Avoiding Bank Fees and Penalties Attached to the New Rules and Reforms

Thanks to the Volcker Rule and other new reforms, banks are now prohibited from making certain kinds of risky investments and engaging in other risky practices. “But let’s face it, banks are in business to make money,” says financial and legal expert Shari Olefson. “So if America’s government tells banks that they can’t make money one way, they’re going to find other ways to make up for it.” Remember the $5 swipe fee Bank of America tried to introduce in 2012? “That is only the beginning,” Olefson guarantees. In her new book, FINANCIAL FRESH START (AMACOM 2013), she offers the following tips to help average bank account holders avoid paying a price for the nation’s well-intended but costly new banking rules and reforms:

* Think. Put some thought into the banking and financial services you need and how you actually use each of these services. For example, many banks now offer several different checking account options. “It behooves you to consider your actual usage in order to ensure that you are not paying for services that you will not use,” Olefson stresses.

* Compare. Shop around for the best banking services at the best prices. Compare at least three different banks and the details on the services that you need. What are the fees each bank charges for various services? What are the requirements you have to meet to avoid penalties? “Some banks require that you have direct deposit, maintain a minimum balance, have multiple accounts at the bank, and pay your bills online in order to avoid additional fees,” Olefson points out.

* Explore alternatives. Depending on the bank and financial services you need, it may make sense for you to avoid paying certain fees by switching to a smaller bank or credit union or even to an online bank. Fees can also sometimes be avoided by consolidating accounts and credit cards, or by switching to a less expensive service, such as away from a premium account to basic checking. It may also be worthwhile to look specifically for banking services to which the new rules don’t apply. For example, banks with less than $10 billion in assets are exempt from many of the new rules and reforms.

* Monitor rewards. In addition to seeking new sources of revenue, some banks and financial service companies are aggressively cutting expenses. If you use your bank’s reward program, keep an eye out for signs that the program may change or even be phased out. “You want to be able to use your rewards before you risk losing them,” says Olefson.

* Practice overdraft prevention. To avoid paying those big new overdraft fees, always keep at least a small cushion in your account. As Olefson reports: “The majority of those fees are due to under $20 in overdrafts!” Try tracking your spending manually, using an old-fashioned paper register, to spend more mindfully. Pay your bills manually, too, since auto-payments are among the leading causes of account overdrafts. Consider linking one or more of your accounts together if the fee for doing so will be less than the overdraft fee. If you do become overdrawn, be sure to pay any overdraft fees quickly in order to avoid being charged even more fees for the original offense.

* Stick to your own ATMs. “You will be charged more for using ATMs that do not belong to your own bank,” Olefson reminders consumers. “It is always wise to plan your ATM visits and cash needs in advance to avoid using another bank’s ATM machines.”

* Rinse, wash, repeat. “Like most other businesses, banks innovate, especially when it comes to the potential types of new fees they can charge, even under the new rules and reforms,” Olefson observes. “These innovations are never-ending. It’s wise to periodically revisit the financial services you use and how much they cost in order to ensure that you pay the very least amount possible.”

Adapted from FINANCIAL FRESH START: Your Five-Step Plan for Adapting and Prospering in the New Economy by Shari Olefson (AMACOM 2013).

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