Banking and Credit Card services cost money. Smart money management can reduce the cost of these services and save good money in the monthly home budget.
When the economic conditions are tough, every penny saved is penny earned. Banking and Credit Card services can cost a substantial amount of expense that usually goes unnoticed because it happens in small measures. But smart financial planning can help to reduce both banking and credit card costs and save a good amount of money over a period of time.
Use Fixed Deposit Account and Get Overdraft Cover
Different bank accounts have different interest rates attached to them. A savings account usually offers a low return in terms of interest, in comparison to a fixed deposit account. Therefore, if there is surplus money, a large part of it should be kept in fixed deposit account, and a smaller part can be in savings account for regular withdrawals and deposits.
Overdraft coverage ensures that even in the event of insufficient bank balance, a check will not bounce. This helps to reduce banking charges for returned checks which can be very high in certain banks. A more ideal way is to keep a diligent track of bank money so that the situation of a returned check does not arise. It can help to avoid any overdraft facility charges as well.
Minimize Borrowings and Pay Credit Card Amount
One of the key ways to save money is to live within means, and spend money only after earning it. As far as possible, borrowing money from a bank or other sources should be avoided. The interest rate burden on such borrowings can put a drain on the monthly household budget. Borrowing must not become a habit, and must be used as a privilege for emergencies.
Credit Card payments should be avoided as far as possible, because they involve a high interest component in many cases. However, even if a payment is made by credit card, the repayment of the amount should be done at the earliest date. Making delayed credit card payments can prove to be very costly because of the stiff interest rates charged. Furthermore, credit cards that charge an annual fee should be cancelled and replaced with free cards.
Avoid fee-based ATMs and Use Online Banking
Cash withdrawals should be made from the ATMs linked with the regular bank account where the withdrawal is free or charges a negligible amount. But cash withdrawal from ATMs that are not connected with the bank’s regular network may charge a considerably high amount of fee for providing the service. If the withdrawals are frequent, it can add up to a significant expense at the end of the month. Efficient cash management can help to avoid this situation.
Online banking not only saves time, but also saves on banking charges in many cases. It also helps in managing savings more efficiently because any idle money can be quickly transferred to high interest yielding accounts. Online bill payments also sometimes give a discount on the total amount of payment. Automatic monthly bill payments can avoid any possible expense on late fee payments.