I’m a Bank Advisor: Avoid These 7 Common Account Mistakes and Do This Instead
Written by
Paige Cerulli
Edited by
Brendan McGinley
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Managing your bank accounts might seem like a simple task, but banking mistakes can cost you money and even put your account security at risk.
To help keep you safe and secure financially, GOBankingRates spoke with Sean Duffey, director of sales strategy and performance at First Merchants Corporation, to hear what constitute the most common mistakes and how you can avoid them in your own account.
Keeping All Your Money in One Account
If you keep all of your money in one account, it can be more difficult for you to save, said Duffey. Instead, it’s a good idea to keep your everyday spending money in a checking account. You can also make automatic transfers into your savings account, which you can use to save for big goals, like a vacation or a home improvement. “Automatic transfers, no matter the size, can help you work toward your goals,” said Duffey.
He also recommended establishing a separate account for your emergency fund. Work to build up an emergency fund large enough to cover three to six months of your living expenses.
Not Keeping Track of Your Transactions
Duffey explained that some customers don’t keep track of their transactions, especially when they’re making automatic payments. Fortunately, there are several tools that you can use to better monitor your transactions.
“Setting up alerts for low balances and low transactions can help you keep control,” he said. “Statements come regularly, so make sure you’re reviewing those.” You can also use budgeting tools to track your spending habits.
Risking Your Security When Banking Online
Online banking is a convenient option, but it’s important to make sure you’re banking online securely. According to Duffey, using weak passwords or logging into your account while on public Wi-Fi can be risky and could expose your sensitive information. “Creating a strong and unique password and updating it regularly is critical,” he said. Many banks are increasing their multi-factor authentication, so turn on that feature for extra security.
He also recommended using a secure network or your phone’s mobile data when accessing your account. Additionally, use your bank’s mobile app or go directly to your bank’s website, since search results could include phishing links.
“Always contact your bank if you see anything suspicious,” said Duffey.
Not Using Mobile Banking Tools
Many banks offer numerous mobile banking tools that can be helpful, but you’ll have to get familiar with them and put them to use. For example, tools like mobile deposits and mobile bill pay can help you stay organized while saving time.
“These tools allow the account to work for you,” said Duffey, underlining why First Merchants Bank has leveraged card controls within its app. While often underutilized, card controls allow you to turn your bank card on and off, limit transactions and receive alerts for all of your transactions, giving you control in how you manage your money.
Keeping Too Much Cash in a Checking Account
Seeing a large balance in your checking account may be satisfying, but it could actually be costing you money.
“You could be missing out on an opportunity to earn interest,” said Duffey. “We recommend moving extra funds into a high-yield savings, money market or CD,” he said. Those solutions can help you earn more money and achieve your savings goals faster. If you have extra cash in your checking account, speak with your banker about alternative options that can help you earn more.
Paying Unnecessary Fees
If you’re not careful, you might find yourself paying unnecessary banking fees. If you use an ATM outside of your branch or network, you’ll be responsible for ATM fees. Duffey said that you could be responsible for overdraft fees if your balance drops below zero, and some accounts will charge a monthly maintenance fee if your balance falls below the required minimum balance.
To avoid these fees, use your bank’s ATM network and set up low balance alerts to ensure you keep enough money in your account. “Choose an account that fits your habits and make sure you can meet the fee waiver requirements, like maintaining a minimum balanced,” Duffey recommended.
Choosing the Wrong Bank
Make sure that your bank is the right fit for your needs, too. Duffey recommended looking for a bank that offers easy and reliable tools, a great mobile app, convenient access to ATMs or branches, clear or fair fees with no surprises and ways to avoid fees, like direct deposit.
“Look for options that fit your needs, like checking, savings, CDs, loans, early payday and strong fraud protection,” he advised.
It’s also important to evaluate the support a bank provides. Consider how your banker can help you leverage your resources and achieve your financial goals. Financial coaching can be highly valuable.
The right bank will give you the tools and support needed to put your money to work for you, so spend plenty of time researching each bank to find the best option for your individual needs.
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