Debt Free Article

The least you need to know

This debt free article will cover the least you need to know about interest rates and checking accounts. You will find the quick reference bullet points to get right to the point for you. If you are looking for any additional info on any of these debt free topics, be sure to visit our main news page (the link is at the bottom of this page) for helpful articles that will help you achieve your debt free life and help you better plan your financial future.

Interest Rates

• Use the Annual Percentage Yield (APY) to compare CDs of different terms and figure out which ones really offer you the best deal.

• The Annual Percentage Rate (APR) includes the rate and certain fees and charges on loans.

• Rates on several loan accounts and a few deposit accounts are variable and are tied to an index. When the index rate goes up or down, so does your rate. Be aware.

• Keep your eye on federal rates, the bank’s prime rate and long term bond rates. The dictate the rates banks set on your personal accounts. Not many people consider this, so be aware of it.

• The more frequently the bank compounds your money, the more interest you earn. Not all banks are the same and many of them have different standards for compounding and when they do it.

• Always get the bank to tell you in no uncertain terms every single deal to you in dollars and cents, instead of percentages. We are not saying you are bad at math; it is just that percentages tend to look better in your head and on paper than dollars and cents do. Also, you will get a more detailed understanding as such.

Checking Accounts

• Most all checking accounts are characterized by high fees and little or no interest.

• Interest baring checking accounts often cost more money than non interest baring checking accounts do. The fees are higher. You earn interest – but there are more fees involved. If you get this type of account – be certain that the interest you are paid out weighs the fees that you are paying for the account. Also, the minimum balance and or deposit and average monthly balance requirements are higher.

• You can get slammed (charged) for up to $3 every single time you use an ATM, because rival banks now tack on a surcharge in addition to the charge your bank will be charging. Meaning, your bank may charge you $1.50 (sometimes more or less) each time you use an ATM that is not at one of your bank’s branches. Plus, the out of network bank you use (ATM) will also charge you perhaps $1.50 – at resorts or hot vacation areas this fee is much higher.  Be aware – this adds up folks.

• If you match your personal checking account habits against what five or six banks charge in fees, you will quickly see which one will save you the most money. Limit your comparisons to only the most common fees and charges that are likely to actually affect you. Additionally, remember to read all the fine print before you sign anything. Is this not the smartest motto in general – not just at banks?

• Be well aware of offers of super high interest rates and free checking. The offer may be only temporary, or there may be extra or hidden fees involved that are not immediately active or known to you up front or obvious to you at first glance. (Again, read the fine print – nothing in life is free in business). One of our favorites is the fee that you get charged when you call your bank’s 800 number and speak person to person – what is that all about?  

• Getting your checking account through a credit union or putting some of your money in a money marker account can boost your interest rate.

• Always be sure that you remember that there is a cost almost every time you engage in checking activity. To steer clear of these totally unnecessary fees and charges, get a copy of the bank’s fee disclosure (available at any branch – or requested by mail) schedule, know your bank’s rules regarding those pesky ATM fees, and avoid bouncing checks and issuing unnecessary stop payment orders. It cost more to stop a payment than it does to bounce, but you have to understand misusage will taint your record with both your bank (who is keeping track by the way) and the vendor.

• You can most likely save $200-$300 each year by switching your checking account to a different bank, and watching your checking habits more closely.

• Internet checking accounts through Internet banks are reputable (but do your homework) and they many times offer high rates because they have to compete with brick and mortar facilities that can be a bit more convenient for many consumers. If you use a checking account for check writing only – check Internet banks.

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