Banking institutions pay interest on savings accounts that they offer. However, bank deposits aren't the only way to make your money grow. "Investments, which include stocks, bonds and mutual funds, can be attractive alternatives to bank deposits because they often provide a higher rate of return over long periods, but remember that there is the potential for a temporary or permanent loss in value", said James Williams, an FDIC Consumer Affairs Specialist. "Young people especially should do their research and consider getting professional advice before putting money into investments".
Paying too much in fees.
Whenever possible, use
your own financial
institution's automated
teller machines or the
ATMs owned by financial
institutions that don't
charge fees to noncustomers.
You can pay $1
to $4 in fees if you get cash
from an ATM that isn't
owned by your financial
institution or isn't part of
an ATM "network" that
your bank belongs to. For
more about how to save on
ATM fees, see the tips
from FDIC Consumer
News online at www·fdic·
gov/consumers/consumer/
news/cnspr04/simple·html.
Try not to "bounce"
checks - that is, writing
checks for more money
than you have in your
account, which can trigger
fees from your financial
institution (about $15 to
$30 for each check) and
from merchants. The best
precaution is to keep your
checkbook up to date and
closely monitor your
balance, which is easier to
do with online and
telephone banking (see
Page 7). Remember to
record your debit card
transactions from ATMs
and merchants so that you
will be sure to have enough
money in your account
when those withdrawals are
processed by you bank.
Financial institutions also
offer "overdraft protection"
services that can help you
avoid the embarrassment
and inconvenience of
having a check returned to
a merchant. But be careful
before signing up because
these programs come with
their own costs.
Pay off your credit card
balance each month, if
possible, so you can avoid
or minimize interest
charges. Also send in your
payment on time to avoid
additional fees. If you don't
expect to pay your credit
card bill in full most
months, consider using a
card with a low interest
rate and a generous "grace
period" (the number of
days before the card
company starts charging
you interest on new
purchases).
Not taking responsibility for your finances.
Do a little comparison shopping
to find accounts that match
your needs at the right
cost. Be sure to review
your bills and bank
statements as soon as
possible after they arrive or
monitor your accounts
periodically online or by
telephone. You want to
make sure there are no
errors, unauthorized
charges or indications that
a thief is using your
identity to commit fraud.
Keep copies of any
contracts or other
documents that describe
your bank accounts, so you
can refer to them in a
dispute. Also remember
that the quickest way to fix
a problem usually is to
work directly with your
bank or other service
provider.
"Many young people don't
take the time to check their
receipts or make the
necessary phone calls or
write letters to correct a
problem",one banker told
FDIC Consumer News.
"Resolving these issues can
be time consuming and
exhausting but doing so
can add up to hundreds of
dollars".
Final Thoughts
Even if you are fortunate
enough to have parents or
other loved ones you can
turn to for help or advice
as you start handling
money on your own, it's
really up to you to take
charge of your finances.
Doing so can be
intimidating for anyone.
It's easy to become
overwhelmed or frustrated.
And everyone makes
mistakes. The important
thing is to take action.
Start small if you need to.
Stretch to pay an extra $50
a month on your credit
card bill or other debts.
Find two or three ways to
cut your spending. Put an
extra $50 a month into a
savings account. Even little
changes can add up to big
savings over time.
Also remember that being
financially independent
doesn't mean you're
entirely on your own.
There are always
government agencies,
including the FDIC and
the other organizations
listed on Pages 10 and 11,
that can help with your
questions or problems.