What is a Monthly Maintenance Fee, and How Do I Avoid Them?

What if you asked a friend to watch over your precious jewels and she said, “Yeah, no problem.” But later on, she hit you up for a monthly fee for babysitting your jewelry. How would you feel, especially as she didn’t tell you upfront about this so-called fee? Probably a little peeved, right?

Unfortunately, this kind of scenario happens all the time in the form of monthly maintenance fees at numerous banks. It’s true. Many financial institutions charge a monthly maintenance fee if you don’t meet certain requirements. As a consumer, it’s important for you to be aware that your bank account may be charging you fees. Along these lines, you should know how to avoid paying them.

What is a monthly maintenance fee?

A monthly maintenance fee is a fee charged by a financial institution to a customer if certain requirements aren’t met. For example, some banks may charge a monthly maintenance fee if your account balance is under a certain threshold.

These fees are charged by banks to help “maintain” your account, kind of like a service fee. Banks thrive off of managing your money and if you carry a high balance in your account, you may get hit with a fee.

How do I avoid monthly maintenance fees?

Paying a monthly maintenance fee can be annoying. What’s worse: you may not even realize you’re getting charged. I remember a friend of mine telling me she was scrolling through her Bank of America account and noticed she was being charged a fee.

Just how much was she paying? The Bank of America monthly maintenance fee was $12 per month. In order to avoid the fee, she had to have a certain balance or sign up for direct deposit. The issue? She didn’t have a steady job at the time and her income was irregular.

My advice to her was to break-up with the big bank and open a bank account that had a free checking account and no fees.

A snapshot look at monthly maintenance fees at big banks

Not all banks charge a monthly maintenance fee. For example, many online banks and credit unions do not charge any fees. However, many large financial institutions do charge monthly fees and these charges vary from bank to bank.

Here’s a closer look at the monthly maintenance fees at big banks and how you can avoid them.

Bank of America monthly maintenance fee

Fee: $12 per month

How to avoid Bank of America monthly maintenance fee: Maintain a balance of $1,500 each day or make one direct deposit equal or greater than $250.

Chase monthly maintenance fee

Fee: $12 per month

How to avoid Chase monthly maintenance fee: Maintain a balance of $1,500 each day, have $500 or more in your account through direct deposit, or have $5,000 or more in various qualified accounts.

US Bank monthly maintenance fee

Fee: $6.95 per month with electronic statements or $8.95 per month for paper statements.

How to avoid US Bank monthly maintenance fee: Have a balance of $1,500 or make $1,000 or more total in direct deposits.

TD Bank monthly maintenance fee

Fee: $15 per month

How to avoid TD Bank monthly maintenance fee: Have $100 or more in your account every day.

Citibank monthly maintenance fee

Fee: $12 per month

How to avoid Citibank monthly maintenance fee: Have $1,500 in qualified accounts or make one eligible direct deposit and bill payment each month.

Wells Fargo monthly maintenance fee

Fee: $10 per month

How to avoid Wells Fargo monthly maintenance fee: Have 10 qualified debit card transactions, make direct deposits of $500 or more to your account, or maintain a $1,500 balance every day.

PNC monthly maintenance fee

Fee: $7 per month

How to avoid PNC monthly maintenance fee: Make direct deposits of $500 or more or maintain a $500 balance each month.

How to never worry about a monthly maintenance fee again

As you can see, monthly maintenance fees vary by bank accounts and each financial institution has different requirements. While you may be able to meet the requirements to avoid bank fees, there is a better way to never worry about paying fees again.

You can simply open an account at an online bank or credit union that doesn’t charge fees. For example, Chime has zero monthly fees so you never have worry about maintaining a certain balance to avoid fees.

 

 

The Problem with Overdraft Fees

“Overdraft” is not a word we like to hear. Why? It generally means you’ll be dinged with a fee you don’t want to pay.

To clarify, an overdraft fee occurs when you don’t have enough money in your bank account to pay for a purchase. When this happens, your bank will pay for the transaction and charge you a hefty overdraft fee for the trouble, no matter how small the transaction. For example, say you purchase a $4 latte without realizing your checking account is close to zero. That single latte on your debit card now puts you in the negative, triggering a $35 overdraft fee – and making this the most expensive cup of coffee you’ve ever purchased.

Banks charge overdraft fees for anything from a debit card purchase, to an attempted ATM withdrawal, to an automatic bill payment. It’s no secret that overdraft fees are expensive and unfair to consumers. But, you can avoid overdraft fees, and in some cases, negotiate them away. Read on to learn more.

Overdraft fees are expensive

Big bank are often the worst offenders when it comes to overdraft fees. In fact, Americans paid more than $15 billion in overdraft fees (sometimes called non-sufficient, or NSF fees) in 2016, according to published reports.

Most banks charge between $30 to $35 for the average account overage, but some charge more. Take a look:

In a nutshell, charging you these hefty fees is an easy way for banks to make money.

“(Overdraft fees) aren’t even closely related to the expense that the bank incurs, and serve more as a penalty than a fee for the required service,” says Chicago attorney and financial expert John R. O’Brien.

“They (fees) tend to be grossly excessive relative to the simple, inexpensive, and largely-computerized process of either returning a check, or notifying the customer that there is an overdraft and that he needs to make a deposit to cover it,” says O’Brien.

Worse yet: overdraft fees often hit low-to-middle-income Americans the hardest.

“People with large balances generally don’t have overdrafts, even if they make a math mistake in their checkbook,” O’Brien says.

Yet, those with lower balances are much more likely to overdraw their accounts by forgetting to record a check or other withdrawal, he says.

Other reasons you may be charged overdraft fees

Spending money you don’t have is one reason you may be charged an overdraft fee. But, those fees really begin to add up when you keep spending – not realizing you’ve already been charged an initial overdraft fee. Just think: for each subsequent transaction, you’ll incur yet another $35 fee!

To make matters worse, some banks levy an extended overdraft fee for each day that you don’t bring your checking account balance back to even. Bank of America, for example, charges an extra $35 per day if your account stays overdrawn for five consecutive days.

Making the most of overdraft fees

Thankfully, there are 4 ways to work around overdraft fees, and to be smart about them if you get hit with these expensive fees. Take a look:

1. Sign up for overdraft protection

Overdraft protection is when your bank allows you to use your savings account, a credit card or another deposit account to pay for purchases you can’t cover with your checking account. It automatically taps into the auxiliary account you’ve synced up with your checking account, and deducts the money from there. You’re charged no overdraft fee, but there may be additional charges that apply. Check with your bank to learn about any other fees.

2. Waive the fee

Overdraft fees aren’t always set in stone. If you’re hit with one, ask your bank if it will waive the fee just this one time. If you haven’t been overdrafted in the past, your bank may be willing to refund the charge back to your account.

3. Seek banks with no fees

Finding a bank with zero overdraft fees can feel like looking for that magic unicorn that doesn’t exist. But trust me, they’re out there. Chime, for example, is one bank that charges no overdraft fees of any kind. A Chime spending account is incapable of getting overdrawn. If you’re dangerously close to the $0 limit, the transaction will get rejected. The account will just wait until you’ve deposited enough money to cover your transaction.

4. Avoid getting overdrafted

Building a spending plan and working budget allows you to live within your means and spend only what you can afford. This will help ensure that you never get to a negative balance. Apps like Mint can get you started down the road of responsible spending.

You got this

We get it: it’s easy to lose track of how much you’re spending until you’ve spent more than you have. But, by keeping track of your budget and switching to a bank account with zero fees, you’ll be on your way to saving more and spending less.

 

6 Reasons an Online Bank Account is Better Than Traditional Banking

After a hectic day, the last thing you want to do is stand in line trying to get your banking done.

Yet, with the rise of online banking, waiting in line doesn’t have to be an issue anymore. Now you can do your banking without even leaving home. Online banking is not only more convenient but gives you the ability to save money, time, and even the planet.

Keep reading to learn more about why online banking is better than traditional banking.

Online Banks Have Lower Fees

Brick and mortar banks have enormous operational expenses that online banks simply don’t have. For example, they need specialized buildings to secure your money, state-of-the-art technology and equipment, and a large staff. They’re in the business to make money, not just store yours. That means fees go up when the bank’s expenses go up. With online banking, fees are kept to a minimum because the bank’s expenses are kept in check.

It’s Easier to Access Your Online Bank

Traditional banking hours aren’t always convenient. For some of us, getting to the bank before closing means leaving work early. It can also mean fighting traffic in the middle of the day, taking time off work, and waiting in long lines. If you do your banking online, there is no traffic and no banking hours. Yes, you may end up on hold waiting to talk to a customer service representative, but at least you can get stuff done while you wait.

Easy Deposits via an App

Most banks will let you make your deposits through one of their many ATMs. But what if you’re not near one of these cash machines? With online banking, making a deposit is as easy as snapping a picture and uploading it to an app. No added stops and no worries about leaving your deposit in an ATM all night (and hoping it’s picked up in the morning). But, if you really want to go to an ATM, most online bank accounts now offer access to a broad ATM network. Chime, for example, allows its members to use more than 30,000 ATM locations nationwide – for free.

Saving Money Can be Automatic

With online banking, saving has never been more simple. For example, you can set up automatic transfers to move money from a checking account into your savings. You can even start small by having Chime round up each transaction made with your Chime debit card. The rounded up amount will be automatically deposited into your savings account. If you want to take your savings efforts further, you can automatically move 10 percent of your paycheck into your savings account each time you get paid. This way your savings is funded with very little effort.

Experience Exceptional Customer Service

Because there are no buildings to staff and maintain, digital banks can often dedicate more resources to their customer service department. When you have questions or concerns, you just have to call. With customers all over the US (or perhaps even the world), the customer service departments at online banks are usually available outside regular business hours. Plus, if you don’t want to pick up the phone, most online banks offer chat features online or via an app.

Do Your Banking Online Because it’s Right for You

Online banking is a great tool. But remember, before you make the switch to an online bank, look at your own banking habits and determine if it is the right move.

Here are some questions you may want to ask yourself when determining if online banking is the best fit you:

  • Do you like going into a branch and talking with your banker or the tellers? If so, you may want to stick with a brick-and-mortar bank.
  • Is it a pain in the neck to get to the bank? If so, an online bank may be your best bet.
  • Do you have complex interactions that are easier done in person? If yes, you may be better off with your current physical bank branch.

As you can see, it’s up to you to decide what type of banking is best. Just keep in mind that if you’re looking for convenience and lower costs, you may want to keep your bank in your pocket.

 

How to Avoid Bank Fees

When you open a bank account, you’re taking a positive first step to managing your money. A bank can safely house your hard-earned cash, help you save money, and more. But, beware: a bank can also cost you money.

That’s right. You may not realize or even notice, but banks can tack on fees for a variety of things. For example, some financial institutions charge a monthly maintenance fee if your balance isn’t at a certain level, effectively punishing you for not having enough money in your account. Talk about adding salt on the wound. And if you overdraw on your account, you may be hit with an overdraft fee, too.

While these fees may not seem like a lot, they can add up. Monthly maintenance fees can be $12 per month and overdraft fees are around $35. Good banks, on the other hand, won’t nickel and dime you with fees. If you want to avoid paying bank fees, here 3 steps you can take.

1. Find out what fees you’re paying

The first thing you want to do is actually know what fees you’re paying for. But don’t fret, this process won’t be time-consuming or require you to comb through all your accounts. Using BankFeeFinder.com, you can easily see just how much you’re paying in monthly maintenance fees, overdraft fees, and more.

Your findings may shock you. According to the Bank Fee Finder 2017 Summary Report, Americans on average pay a whopping $329 per year in bank fees. So, find out what fees you’re paying for, as this way you’ll know where your money is going.

2. Read the terms and conditions

You may have seen an unexpected monthly maintenance fee as you scrolled through your checking account. Perhaps you thought: “What is this?!” Banks may tack on fees and require you to meet certain minimums in order to waive those charges.

If you want to avoid bank fees, you can start by reading the fine print on your accounts. Is there a monthly maintenance fee and if so, what conditions do you need to meet in order to avoid paying it? Are there overdraft fees and if so, how much are they?

The first step is knowing what bank fees you can be hit with. Once you know what the fees are, make sure you have a clear understanding of what conditions can trigger these fees. Then, aim to meet the conditions and requirements so that you don’t end up paying fees.

3. Switch to banks with no fees

What if you’re just sick of bank fees altogether? You’re tired of trying to play a game with your money and keep certain minimums or meet requirements to avoid fees. If this sounds like you, it may be time to switch financial institutions and use banks with no fees.

Many big banks charge overdraft fees, monthly maintenance fees and more. If you want to avoid bank fees, you should consider looking for banks with free checking or consider an online bank account or credit union. Many online bank accounts like Chime, as well as credit unions, have no overdraft fees or monthly maintenance fees. Online banks, for example, don’t carry hefty overhead costs as they don’t have brick-and-mortar locations. They pass along these savings to you in the form of no fees. This means you can keep more of your hard-earned dough.

If you’re ready to ditch fees for good, you can open a bank account online. There are plenty of good banks out there, so make sure you find one that fits your needs. For example, perhaps you want to make sure there are ATMs in your area and that you’re getting a free checking account. And, remember: read the fine print and make sure you won’t be hit with overdraft fees or monthly maintenance fees.

By making the switch to an online bank or credit union, you can put money back into your pocket and avoid annoying, unnecessary bank fees.

Bottom line

Bank fees may seem like they’re a fact of life, but they’re not. The key is to be aware of fees in the first place and take action so you can avoid them. Lastly, stay on the look-out for banks with no fees and this way you’ll never have to worry about an unexpected fee again.

 

What is an Overdraft Fee and How Do I Avoid Them?

When you’re trying to get ahead with your finances, incurring unexpected banking fees can set you back.

For example, an overdraft fee is a common charge that many Americans experience without realizing it. And, if you’re not careful, these fees can add up quickly. In fact, customers who overdraft frequently can pay up to $450 in fees per year.

But what exactly is an overdraft fee and how can you avoid them?

What is an overdraft fee?

If you place a transaction that sends your bank account below $0, then one of two things will happen:

1. Your bank will decline the transaction for insufficient funds or
2. Your bank will put the transaction through. However, the service doesn’t come cheap. In this case, your bank will charge what is known as an overdraft fee for overdraft protection. In many cases, you may have opted-in for overdraft protection – without even knowing it.

Which transactions can trigger an overdraft fee?

There are four transactions that cause these fees:

  1. Checks and other transactions using your checking account number
  2. Recurring or automatic bill payments e.g. utility bills
  3. ATM transactions including withdrawals. If you opted for overdraft protection and withdraw more than you actually have in your account, you’ll be charged an overdraft fee.
  4. Debit card transactions including everyday purchases. One common debit card myth is that debit cards are free of fees. While it is true that with a debit card you won’t experience charges associated with credit cards like late payments, balance transfers, foreign transactions, cash advance or interest, there are still fees attached. These include service fees, daily balance fees, ATM charges, and of course, overdraft fees.

How much is an overdraft fee?

According to the Consumer Financial Protection Bureau, most financial institutions charge about $34 per transaction for overdrafts. The term per transaction is important here.

A few years ago, I incurred $120 in overdraft fees in a single day. Because all my purchases “went through,” I was clueless until about 12 hours later when I checked my mobile banking app. Interestingly, looking back at the statements now, one of the purchases I made was less than $10! Yet, the bank charged me $30 due to insufficient funds. It was a hard lesson to learn.

That particular bank limited the number of transactions that they overdraft per day. Others will charge an extended overdraft fee if your account remains overdrawn for a certain number of days.

How to avoid an overdraft fee

Experiencing overdraft fees is not only costly, but it’s also frustrating as it’s your job to get your account back in good standing. Here are several tips to avoid overdraft fees altogether.

Read the fine print.

Before you choose a bank account, it’s important to check the bank’s terms and conditions, especially when it comes to fees. While banks are no longer allowed to automatically charge overdraft fees without your consent, it’s easy to opt-in for overdraft protection without realizing it. It’s advisable to not get caught off guard with “protection” you may not need.

Personally, I would have preferred a declined transaction to alert me to the fact that my account dipped below zero. Instead, the blissful ignorance of overdraft protection ended up being stressful and took almost an hour to resolve on the phone.

Switch to a fee-free bank account.

The best way to avoid hidden fees altogether is to switch to a bank account with no fees like Chime. With Chime, you don’t have to worry about incurring fees for non-sufficient funds. Instead, any payments or withdrawals that would result in a negative balance are rejected.

As you can see, the less you have to worry about fees, the more you can focus on building the lifestyle of your dreams. Are you ready to take charge of your finances and stop paying overdraft fees?

Don’t be afraid to ask your bank to waive the fees.

If you were recently charged an overdraft fee, don’t be afraid to ask the bank to waive it. If you’re a “first time offender” like I was, your bank should be able to waive the fees within a few business days.

Get paid earlier with direct deposit.

One reason that people experience overdraft charges is that they don’t get paid quickly enough. You may even still deposit paper checks and wait for the checks to clear before you see your money. Both of these scenarios can inhibit your ability to budget and can lead to overdraft fees.

With Chime’s Early Direct Deposit feature, you can get paid up to two days earlier than traditional banks. Your money is available when your employer sends the funds, giving you peace of mind.

Check your balances regularly. 

One major issue I have with large banks is that it takes time for transactions to update in the mobile banking app. Choosing an innovative bank account like Chime, however, speeds up the transaction process. Chime provides you with real-time alerts for each transaction, allowing you to stay on top of your finances.

Double-check your budget.

If your account is going into overdraft regularly, it may be time to evaluate whether this is highlighting an issue such as overspending. In some cases, it can mean that it’s time to tighten the purse strings and go on a spending diet. You can also consider looking into budgeting apps to get some extra support.

Build up your emergency fund.

Some people end up overdrafting when an emergency pops up. However, as a reminder, having overdraft protection is not the same as having an emergency fund. When an unexpected expense occurs, the last thing you’ll want to do is shell out money for banking fees.

How much should you set aside? A good rule of thumb is to save three to six months of living expenses in your emergency fund. Your fund should also be kept separate from your regular checking and savings accounts.

 

 

This is Why an Online Bank Account is Better Than Traditional Banking

After a hectic day, the last thing you want to do is stand in line trying to get your banking done.

Yet, with the rise of online banking, waiting in line doesn’t have to be an issue anymore. Now you can do your banking without even leaving home. Online banking is not only more convenient, but gives you the ability to save money, time, and even the planet.

Keep reading to learn more about why online banking is better than traditional banking.

Online Banks Have Lower Fees

Brick and mortar banks have enormous operational expenses that online banks simply don’t have. For example, they need specialized buildings to secure your money, state-of-the-art technology and equipment, and a large staff. They’re in the business to make money, not just store yours. That means fees go up when the bank’s expenses go up. With online banking, fees are kept to a minimum because the bank’s expenses are kept in check.

It’s Easier to Access Your Online Bank

Traditional banking hours aren’t always convenient. For some of us, getting to the bank before closing means leaving work early. It can also mean fighting traffic in the middle of the day, taking time off work, and waiting in long lines. If you do your banking online, there is no traffic and no banking hours. Yes, you may end up on hold waiting to talk to a customer service representative, but at least you can get stuff done while you wait.

Easy Deposits via an App

Most banks will let you make your deposits through one of their many ATMs. But what if you’re not near one of these cash machines? With online banking, making a deposit is as easy as snapping a picture and uploading it to an app. No added stops and no worries about leaving your deposit in an ATM all night (and hoping it’s picked up in the morning). But, if you really want to go to an ATM, most online bank accounts now offer access to a broad ATM network. Chime, for example, allows its members to use more than 30,000 ATM locations nationwide – for free.

Saving Money Can be Automatic

With online banking, saving has never been more simple. For example, you can set up automatic transfers to move money from a checking account into your savings. You can even start small by having Chime round up each transaction made with your Chime debit card. The rounded up amount will be automatically deposited into your savings account. If you want to take your savings efforts further, you can automatically move 10 percent of your paycheck into your savings account each time you get your paycheck. This way your savings is funded with very little effort.

Experience Exceptional Customer Service

Because there are no buildings to staff and maintain, digital banks can often dedicate more resources to their customer service department. When you have questions or concerns, you just have to call. With customers all over the US (or perhaps even the world), the customer service departments at online banks are usually available outside regular business hours. Plus, if you don’t want to pick up the phone, most online banks offer chat features online or via an app.

Do Your Banking Online Because it’s Right for You

Online banking is a great tool. But remember, before you make the switch to an online bank, look at your own banking habits and determine if it is the right move.

Here are some questions you may want to ask yourself when determining if online banking is the best fit you:

  • Do you like going into a branch and talking with your banker or the tellers? If so, you may want to stick with a brick-and-mortar bank.
  • Is it a pain in the neck to get to the bank? If so, an online bank may be your best bet.
  • Do you have complex interactions that are easier done in person? If yes, you may be better off with your current physical bank branch.

As you can see, it’s up to you to decide what type of banking is best. Just keep in mind that if you’re looking for convenience and lower costs, you may want to keep your bank in your pocket.

 

6 Situations When You Should Definitely Change Banks

Do you know how some people are quick to purchase those novel kitchen gadgets in a TV infomercial? Well, there were a handful of years when I got excited about new banking options and opened a bunch of savings accounts with different banks.

Just like people found uses for those “As Seen on TV” gadgets, I found ways to justify my new accounts. Can you say “money nerd?” Fast forward to the here and now. While I’ll no longer open a bank account on an infomercial whim, I still keep an eye out for better options.

So when is it time to say “goodbye” to your bank for a better alternative? Here are 6 situations when you should definitely change your bank:

1. When You Keep Getting Dinged With Fees  

Bank fees are pesky and downright unpleasant. Plus, checking fees, ATM fees, and overdraft charges can add up quickly. In fact, in 2016 big banks made a killing from such bank fees — $33 billion in overdraft fees alone.

And, it’s not just the big banks that ding you with fees. You’ll need to be careful when you open an account with any financial institution. While I am a big proponent of credit unions, it turns out that my free checking account required a minimum number of transactions a month. If I didn’t meet that minimum, I’d be charged a $20 fee. No bueno.

You may also incur an overdraft fee from pure forgetfulness or from a one-time expense. For instance, earlier this year I accidentally tapped into some of the money I deposited for my quarterly taxes and got dinged with several overdraft fees. Why? Because the transactions went through before I had a chance to transfer sufficient funds to cover the withdrawals. It happens to the best of us and luckily there are now many no fee banking options that have eliminated unnecessary bank fees.

2. When You Aren’t Able to Talk to a Human

Raise your hand if you don’t have time to stay on hold on the phone for an hour to resolve a bank issue. Customer service like this oftentimes has you doing a #facepalm and asking yourself whyyyy? Especially when you need to tend to an urgent matter, such as a lost debit card or suspected fraud. In these instances, you’ll want to get in contact with someone stat. If the customer service isn’t up to snuff, it’s time to take your business elsewhere.

3. When You Realize You Go Online, All the Time…

While it’s nice to have a brick and mortar branch to step foot in, can you remember the last time you needed to? l only visit a branch to take money out of the ATM, but I usually get cash back when I’m at a store.

Sure, it’s useful to go inside a branch if you want to talk to someone about say, opening a loan, but I’ve found that it’s usually fairly easy to talk to a human with an online or mobile bank. This was the case when I needed to order checks, or when I was waiting on a debit card.

4. …And the Bank’s App Stinks

While not necessarily a deal-breaker, it makes things easier when a bank has a user-friendly mobile banking app. I find that I tend to keep better tabs on my accounts and check in more frequently if the app helps me do what I want quickly and easily. Also, some bank apps let you make notes on tax write-offs or add an attachment with a transaction, which comes in super handy for self-employed freelancers such as myself.

5. When You’re Losing Money

Why stick to what you’re used to when there are bank accounts that will actually help you save money with no fees? You also don’t have to stay with a bank just because you may think you’re making more money off interest. The average savings account offers only a 0.06 percent annual interest yield, and most of the big banks only have a 0.01 percent annual interest yield.

6. When You Just Want More

Sometimes there doesn’t necessarily need to be something wrong with your bank. In the last few years, I opened new bank accounts because I was enticed by cool incentives and modern features online-only banks were offering. For instance, some banks offer easier ways to save money and early direct deposit features. These days there are plenty of banking options that are in step with your needs and help, not hinder your savings goals.

 

How to Choose a Bank Account After College

After graduation, the world of adulting offers exciting possibilities. But it also presents unique challenges – and a host of unexpected expenses. If you’re like many recent grads, you may be wondering how to make decisions that will put you on the path to long-term financial success.

Although there are many roads leading to a positive financial future, an easy way to start your journey is to establish a bank account that will help you achieve your savings goals. Take a look at our 4 tips for choosing a bank account after college.

Set realistic financial goals

Before we go any further, it’s important to define your money goals. You don’t have to get as elaborate as a vision board if you don’t want to. The important thing is to set goals that are SMART. This means they should be Specific, Measurable, Attainable, Relevant and Time-Bound.

Let’s say that your goals include paying off all your student loans and starting an emergency fund in the next few months. It’s going to be pretty hard to achieve this without putting together a framework using the SMART goal strategy. Here’s an example of the “smart” way to turn your debt-free dreams into an action plan:

Goal: You’d like to build up a $3,000 emergency fund within six months.

This may seem lofty but once you have a goal, you can start working toward achieving it. And, the right bank account can help you get there faster. For example, you can choose a bank account that encourages saving and makes it easier for you to sock money away seamlessly. More on this topic soon.

Explore your options

If you currently have a student checking account with no fees, make sure to read the fine print because those fees might kick in once you graduate. The good news is that you aren’t obligated to stick with your college bank and there are many other options available.

One option is to look into credit unions. If you’re not familiar with credit unions, they function like banks, but instead of being privately owned, they are non-profit member-owned organizations.

When I bought my first car a few years ago, using a credit union allowed me to get a more favorable interest rate than at a traditional bank or through the car dealership. I also ended up opening a bank account at the credit union because the fees were low.

However, one drawback of using credit unions is that they can sometimes are behind the curve when it comes to technology. For example, last year, I needed to make some changes to my account and had to send a fax with my request. I then had to go to FedEx to get this done after I Googled “How do I send a fax?” An online portal would have made my life much easier.

Online banking can meet your needs without the hefty fees

Why are online bank accounts gaining so much popularity? There are a few reasons. The first is that the future is now when it comes to doing business online. And that includes financial services such as banking.

Think about it. When was the last time you set foot inside a bank? If your answer is “when I opened my bank account,” then it probably means it won’t be too difficult to make the switch. In fact, most millennials prefer to bank online.

However, apart from the convenience, banking with traditional “big banks” can cost you a lot of money in unnecessary fees.

About two years ago, when I got serious about my finances and created a budget that fit my personality type, I reviewed my bank account statements for the previous 90 days. Apart from revealing one too many Target runs, I was shocked to realize just how much I paid in banking fees that I didn’t even know about.

Here’s a breakdown of the fees I paid each month:-

  • Minimum Balance Fees: $15. Upon further digging, I realized that my “free” checking account came with strings attached. If my account dipped below $100 at any time during the month, I ended up paying a fee.
  • Overdraft Protection Fees: $35.
  • Service Fees: $1. Not a huge amount but when you are a 20-something, every penny saved counts.

This all added up to hundreds of dollars each year – money I paid to maintain a big bank that I rarely set foot in. Money that I could have used to pay off debt or to save toward a vacation.

If you want to start off on the right foot after graduation, then fees should be a deal breaker when it comes to choosing a bank account. To avoid unnecessary spending. look for an online bank account like Chime that doesn’t believe in unnecessary fees. In fact, if you attempt to make a transaction that is greater than the amount in your Spending Account balance, Chime will actually decline the transaction and immediately send you a push notification through the app to let you know why it was declined. You will always have a real-time update on your finances at your fingertips.

Automate Your Savings

One of the best ways you can win at adulting is to automate your life starting with your savings. Chime makes it easy for you do this in two ways. The first is to help save as soon as you get paid. If you open a Chime bank account and select Automatic Savings, Chime will automatically transfer 10% of every paycheck directly into your savings account.

Another awesome Chime benefit is that you can save every time you spend. Chime actually rounds up each transaction made with your Chime card to the nearest dollar and transfers the round-up from your Spending account into your Chime Savings account.

How’s that for a bank account that has your best interests in mind?

 

How Much Money Should You Have In Your Bank Account?

A few months ago, we talked about how much money you should have in your savings account. In that article we gave you a handy-dandy formula to help you decide how much money you should keep in your savings account, the truth is, it depends on your financial situation but we can provide guidance (below) to help you make those decisions.  Today we tackle a similar question: how much money should you keep as a buffer in your checking account?

What is a checking account buffer?

Before going any further, it’s important to first understand exactly what a checking account buffer is. Basically, a buffer is any extra money you have left in your checking account after you’ve paid your bills. Most people who have a checking account buffer keep this money in their account to use for emergencies or unexpected expenses that may pop-up from time to time. A checking account buffer should be in addition to a regular emergency fund. An emergency fund should be reserved for emergencies while a checking account buffer should provide some additional peace of mind.

How much buffer should you keep in your checking account?

A study by the Pew Charitable Trusts found that the most expensive financial shock in a year that a median size family may expect is around $2,000. However, they also found that this varies by income. Households with an income of less than $25,000 may expect a financial shock of around $1,000 while families making between $50,000 and $85,000 see a median financial shock of around $2,500 in a year.

We all know that life can throw us curveballs and a checking account buffer can be a good way to help plan for some of those costs, while you work toward building an emergency fund. Vernon Hurd, the Executive Director of the Thomas County Economic Development Alliance in Colby, Kansas added “I started by keeping around $500 in my checking account at all times. It’s enough that I can cover most unplanned expenses without the need to transfer money from savings.”

Also, make sure your bank account doesn’t charge you minimum balance fees which can eat away at your checking account buffer.  Check out back accounts with no fees such as Chime who even can help you start building a buffer with automatic savings tools.

Where do I start with my checking account buffer?

Just like the size of your savings account, it depends. And, to better understand what other people think about this, I sent out a survey by email and posted it on social media. The responses I got were all across the board.

Some said as little as $100. Others said $250, $500, or $1,000. Still, others based it off of income or expenses. But, 100% of respondents said yes, you should have a buffer in your checking account.

When it comes down to it, each person has a solid reason for the amount of money they opt to keep in their checking account buffer. For my respondents, their answers were based on how much they earn, how much they spend each month, and what type of lifestyle they lead. For example, someone with kids may choose to keep more of a checking account buffer than a single person.

“With variable expenses, two kids, and automatic deductions for bills keeping a buffer helps me not have to worry about if I have enough money to purchase something at any given time,” says Kim Studdard, an online business manager from Kansas City, Missouri.

Likewise, if you’re self-employed with a variable payment schedule, or a homeowner, you may need to keep a larger checking account buffer to account for those lifestyle choices as well.

How to start building a checking account buffer today

Unfortunately, not everyone can snap their fingers and build a checking account buffer overnight. If you’re currently living paycheck-to-paycheck, it may take time to build a healthy checking account buffer of any size.

Personally, when I started budgeting, I didn’t have a checking account buffer. I had to slowly ease myself into a healthy checking account surplus, $20 at a time.

Making sure you’re not losing your hard-earned money to expensive and unnecessary bank fees is also a good way to start building a checking account buffer. For starters, you may want to switch to a bank account with no fees, like Chime. Remember: it’s better to start small than not start at all.

 

How to Decide If You Should Get A Joint Bank Account With Your SO

If you’re tired of sending Venmo requests to your significant other and tracking who will pay for dinner, you’re not alone. With half of millennials combining finances with partners before marriage, it’s clear that many don’t wait to combine money until after they tie the knot.

But, even though it might seem easy to open a joint account with your boo, it’s not a decision that should be taken lightly. In fact, when deciding what banking options are best for you and your significant other, it’s key to discuss your finances before cohabitating – and then continue to have money talks on a regular basis. In the meantime, here’s a primer on whether to open a joint account or keep things separate (or both).

When is it right to open a joint account?

Joint accounts provide ease of use for couples and eliminate the need to constantly send money back and forth. But beyond that, joint accounts make it easier for couples to work toward a shared goal, like saving for an upcoming vacation or a down payment on a house. It does require one of you to close a bank account and there are pros and cons to making that commitment.

But, keep in mind that, because joint accounts are equally owned by both people, most couples do not begin their relationship with a joint account. Instead, it is often better for a couple to gradually work toward combining funds. Opening a joint account should not be taken lightly as the account is equally owned by both parties.It also means that either person on the account can withdraw the balance at any time. It also means that if your other half goes through a lawsuit, bankruptcy or debt collection, the joint account can be drawn upon by the government or authorities. Thinking about the worst case scenario may not feel romantic, but it’s necessary.

To break things down even further, take a look at our list of pros and cons:

Joint Account Pros:

  1. You will be able to pay bills from the same account.
  2. You will no longer have to send those annoying Venmo requests or track your money to make sure you’re not paying way more than you should.
  3. You and your partner will have more financial transparency.
  4. You and your partner won’t have to constantly discuss which account bills will be paid from which account.

Joint Account Cons:

  1. You may feel less independent.
  2. Both people have 100% access to the account.
  3. In the event of a  break-up, one partner might drain the account and you’ll have no easy recourse.
  4. In the event of death, money in a joint checking account is typically given to the other person on the account. (Despite what may be written in his or her will.)

When is it right to keep a separate account?

Perhaps you prefer complete financial independence or don’t feel ready to become financially bound to your significant other.

Or, maybe you two are still getting to know each other and haven’t yet disclosed income, debt or money matters. Whatever your reason, there’s nothing wrong with keeping a separate bank account. In fact, nearly one-fourth of couples choose to maintain separate checking accounts even after marriage.

To this end, separate accounts don’t have to mean completely separate finances. With apps like Honeyfi and Honeydue, couples are able to manage their finances as a team without opening joint accounts. These apps allow couples to choose which credit cards and checking accounts to link and share with their other half. The end result? Household finances are shared and organized in one place.

Should you have both a joint and separate account?

The good news is that you don’t have to choose between one or the other. Many couples choose to have both. Joint accounts and separate accounts offer flexibility and can have different purposes.

For Michigan couple Katie VanArsdall and Melissa Silvia, a combination of accounts just made sense. “We merged finances when we moved in together, but we also wanted to keep our own separate accounts because we both work full-time jobs and make money that we consider to be our money,” says VanArsdall.

“But for all of our joint bills, we have a joint account. It’s so much easier to just figure out our monthly expenses and mutually put money from each paycheck into a joint account and pay our joint bills from there. It’s made everything so much easier to have a mixture of both accounts,” she says.

Communicate, communicate, communicate

The most important thing to do before making a decision is to sit down with your SO and have an honest conversation about goals, preferences, and finances.

Grab a glass of wine or sparkling water and make time for a money date. For starters, set aside thirty minutes and ask each other these specific financial questions:

  1. What are our shared financial goals as a couple?
  2. Do we have debt we are trying to pay-off or a big expense we are saving for?
  3. Do we have joint expenses and bills?
  4. Are there any money guidelines we want to implement as a couple?

As you can see, when it comes to joint accounts versus separate accounts, there isn’t a wrong answer. It’s up to you and your partner to decide what’s best for your money sitch. As long as you remember to keep the communication channels open and be open to making changes as you both see fit, you should be on your way to finding your banking groove.