This year was a tumultuous one for banking: Occupy Wall Street protests around the country focused Americans’ anger against the financial industry, while widespread outrage over banks’ attempts to charge fees for debit card use culminated in a call for Americans to pull their money out of big banks last month on what was dubbed “Bank Transfer Day.”
But whether your checking account is at a big national bank, small community bank, online bank or credit union, 2012 is a chance to begin afresh. Start 2012 on the right foot with these resolutions for better banking.
1. Audit your bank. The silver lining of the debit fee debacle is that it made many of us more aware of the fees our banks charge us and of what we’re getting in return. Start the new year by tallying up the fees you’re being charged for things like monthly account maintenance, overdraft protection transfers and out-of-network ATM use. How much are you paying each month? And what perks are you getting in return? Maybe you don’t need a branch in every mid-sized city. Maybe you love the high-tech bells and whistles like being able to deposit a check by taking a picture of it. Only you can make that determination. But if the math doesn’t add up, consider another institution.
2. Use cash when you can. If there was one thing we learned in 2011, it was just how expensive it is for small merchants to process debit card transactions because of interchange fees. Although the Federal Reserve set a cap on these fees last year, loopholes in the legislation mean that mom-and-pop businesses still get socked with hefty fees. So, maybe 2012 can be the year you pledge not to use a debit card for a cup of coffee. Maybe you want to take it a little further and go cash-only for stuff that costs less than, say, $5. You’ll help yourself, as well; many studies find that when people use cash, they spend less than they do when paying with plastic.
3. Set up text alerts. Many banks and credit unions will, at your request, send you an automated text message whenever your balance drops below an amount you select. Not only will it keep you from getting dinged with an insufficient funds fee, it can alert you if your account information has been compromised. If a criminal gets his or her hands on your account information and decides to take it on a shopping spree, you’ll be able to put a stop to it before they empty your account. Some financial institutions also let you receive alerts if transactions above a certain dollar amount are made; security experts say this is also a valuable tool to thwart unauthorized purchases.
4. Think of a better PIN. It’s your birth date, isn’t it? Or your dog’s name? Or maybe you’re lazy and you just key in “123456” or “password” when you use your debit card. Stop it. You might as well print your password in permanent marker on the back of the card. Study after study of PINs and passwords show that an alarming number of us have easily guessable ones. Forbes.com has two lists of the most popular — that is, the least secure — passwords of 2011. If you see your PIN on either list, change it now. Even if you don’t, your security code is probably a lot more vulnerable than you think. Sophisticated criminals now coordinate their account number-gathering with infiltrating social networks like Facebook — which means they already know your dog’s name and your birthday.
5. Make saving automatic. Building up an emergency fund or saving for a big purchase is easier if you don’t have to think about it. Set up an automatic transfer from your checking account to a linked savings account each month. If you get a paycheck via direct deposit, see if the system lets you send money to two different accounts (many do). Arrange to have a portion of each paycheck deposited into a separate savings account. If you think you’ll be tempted to dip into your cash stash for everyday expenses, open that savings account at a separate institution to boost the “out of sight, out of mind” factor.