Personal Finance Ology

Modern day banking has never been easier and with credit and debit cards taking the place of cash it has never been more important to get a current account with online banking.

Being able to check your bank balance over the net is a great way to keep track of your spending. You can link your ISA and your current account to make it easier to transfer money between the two. You can also set up direct debits and send payments to other bank accounts. You are completely in control of your own finances, which makes it easier to save money and to budget.

The phenomenon makes it easier for you to be in control of your bank account, instead of having to traipse down to the bank every time you want to pay your electricity bill or your rent. Once you have set up a scheduled payment it is just as easy to cancel it and you are always in control.

You can also monitor your account and it is easier to spot something that is out of the ordinary or when something has gone wrong with your account. Most banks also let you check the balance of your account on your phone, so you can figure out what you can afford to buy at the shops.

Online banking is also a good resource for people who are self-employed. You are able to print off bank statements, making it easier to do your own accounts. To stay safe online there are a few things you should remember, try to keep personal information out of your password as these can be easy to guess. Try to change your password regularly, this way you can keep an element of spontaneity to your
password. Do not give banking details over email, your bank will not ask for these details via email.

The whole online banking phenomenon has made life easier for the average person. It has never been easier to check balances, transfer money, budget and make payments. Online banking facilities are heavily guarded making it unlikely that someone else could access your account.

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Savings Accounts
It is always a good idea to have an emergency fund set aside for times of uncertainty. The normal recommendation is to have at least three months of expenses saved. With that being said here are a few options you have to choose from so that you can assure yourself a safety net is there to catch if the unexpected occurs.

Basic Savings Account

The Basic Savings Account is a type of account you can use to store your emergency cash. I wouldn’t recommend using it for large amounts of cash being that the interest rates on the Basic Savings Account is usually pretty low and you could find other accounts with higher interest rates for your large lump sums of money so that you can earn more money on your money.

With this type of account there may be fees associated with it if you don’t meet the minimum balance or if you perform more transactions beyond the minimum amount allowed. Therefore, it is important for you to ask your bank representative about any fees associated with this type of account before you consider opening one.

High-Yield Money Market Accounts

These accounts can be compared to a checking and savings account rolled into one. On the savings side they pay an interest rate, which is usually higher than a Basic Savings Account and on the checking side you have the ability to write a limited amount of checks. However, with a High Yield Money Market Account you will need a higher balance to open one compared to the required minimum balance of a Basic Checking or Savings Account. Another difference in High Yield Money Market Accounts is that you normally would have to go to an online bank to find one. Online banks are able to offer higher interest rates due to their minimal expenses they incur in relation to a physical bank such as Chase or Bank Of America.

Once you begin to look around for online banks offering High Yield Money Market Accounts, you are sure to find many other institutions offering them however it is important to do your research on these offers. I would recommend, for those just starting out, to go with institutions that are FDIC insured this way you know your money is safe.

Certificates of Deposit

A Certificate of Deposit is a way to earn higher interest on your money. However, it is different from the Basic Savings Account and the High Yield Money Market Account being that you can’t make any transactions on the account. You can’t withdraw any money or write checks on the account. You earn higher interest rates by keeping your money in the account for a certain amount of time.

Basic CD’s

When you invest in a Basic Certificate of Deposit you are committing your money to the bank for a certain period of time. The longer you commit your money to the bank the higher interest rate you will receive. This is because any money that you deposit into this account the bank will use to offer loans to it’s customers at a higher interest rate. Therefore, the longer you commit to leaving your money untouched the higher compensation you get because the bank will be able to make a profit off of your money. This is the business of banks.

The normal time commitment can range from three months to five years. When you have completed your time commitment you are free to take your money and your earnings or you could rollover the balance into another CD. In some instances your bank may automatically renew your CD therefore it is important to ask your representative how they handle that and ask to be notified once your CD has matured. If you have to withdraw your money before the end of your time commitment you will be charged a fee. Therefore, it’s important to decide how much money you can afford to put away for the length of time required by your bank.

There are many different types of CD’s you could choose from. Some banks offer a variety of CD’s while others may offer one or two options. Just know that just because you are banking with one bank that doesn’t mean that you can’t go to other banks and compare their investment options with your current bank. You may find a better option somewhere else.

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Money Market Accounts

The characteristics of Money Market Accounts resemble that of a savings account rather than a checking account because of their limitation on monthly transactions. The benefits of these types of accounts are their interest rates. They offer a much higher interest rate. However, along with the higher interest rates comes a required higher minimum balance. Therefore if your balance falls below the minimum balance you will be charged a large amount of fees. These types of accounts are used to save up for large purchases such as college tuition or income taxes.

Money Market Mutual Fund

These accounts can be used as another way to earn interest on your money while still being able to use it and they work almost the same way as a Money Market Account. However, the FDIC does not insure these. Therefore, a lot of people just use them to hold money for a short period of time until they decide where they would like to invest that money. If you have a certain amount of money that you won’t need for about 6- 12 months I would recommend you consider investing it rather than just holding it in this type of account.

Asset Management Account

An Asset Management Account is a mixture of a bank account and a brokerage account. What this means is that you get the benefits of investing your money while still being able to have access to it. You have check writing privileges with this account however you don’t want to use the money for everyday purchase as you would use your checking account ATM card. The advantage of having access to the money in this account is that you can use it to take advantage of other investment opportunities.

As you can see there are quit a few options when it comes to checking accounts. Take the time to have your banking representative explain them to you so that you can choose the one that best suits your needs.

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Checking accounts are usually the primary reason many people start a relationship with their banks. Usually you will find parents opening an account for their children or grandparents opening one for their grandchildren. Either way checking accounts are a popular service within the Banking Facility.

Types of Checking Accounts

Alongside the common checking account, there are many other options, services and features you can add on to your account to personalize it to suit your needs. The basic function of the checking account stays the same it’s just the way it performs that changes with the different type you choose.

Basic Checking

This account is normally for people who write very few checks monthly and would like an ATM or debit card. At some Banks there may be some fees associated with this account such as a maintenance fee, which is a monthly fee charged to your account if your balance falls below the required amount or you may be charged a fee if you write more checks than what is allowed monthly. A lot of times you can avoid fees being charged to your account if you use direct deposit for your paychecks. Before opening any account be sure to ask about any and all fees that are associated with it.

Student Checking Accounts and Senior Citizen Checking Accounts

Many banks offer accounts geared towards the particular needs of students or senior citizens. They are similar to the Basic Checking Accounts, however they may offer discounts on certain things. For instance, a Student Checking Account may offer free ATM usage or discounts to venues that students may find interesting while Senior Citizen Checking Accounts may offer discounts on prescriptions or discounted travelers checks.

Interest Bearing Checking Account

An Interest Bearing Checking Account is designed to pay you a small percentage of interest on your account monthly if you meet the certain qualifications. One of the most common qualifications is maintaining a certain balance. It is important to know how your bank calculates the minimum balance. Some banks require you to have the minimum balance in your account every day of the month while others require the average of your monthly balance to be higher than the minimum balance. This is information you should know so that you know when, where and how you would be charged a fee.

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