Nowadays, you just can’t manage your finances properly without knowing the basics about checking accounts and saving accounts! If these concepts are something new for you, you’re in the perfect place, since you will find complete explanations below!
A checking account is basically a bank account used for depositing and withdrawing money, as well as paying various bills, while a savings one simply limits such operations, allowing you to put some money aside.
Of course, simply knowing about these differences doesn’t mean that you’re actually using your checking account correctly! Below you can find three of the most common mistakes, as well as solutions to them!
Using a checking account as a savings one
Basically, you have access to all your money and you can easily spend them before managing to put something aside. Instead of doing this, open a savings account, with a high APY. This will allow you to earn interest depending on how much you deposit into it! A good annual percentage yield is between 3 and 5 percent, so choose wisely before deciding upon one.
Using just your card and ignoring cash
We know it’s pretty convenient to keep using your card, but be very careful with this, as you don’t want to spend what you might now have! Instead, try having some cash in your wallet as well.
This can sound a bit old school, but having around $100 for the week is a great tip, in case you don’t want to overspend and eventually become dependent on your debit card.
Writing checks you can’t cash instead of monitoring your checking account
Never make expenses that your bank account can’t afford! This will put your account into overdraft and the bank will eventually add overdraft fees and put you in a very ugly situation.
Instead, it’s highly recommended to check your account every few days and see if you can actually afford the stuff you’re planning to buy. Additionally, there are some great apps you can download, in order to keep track of your finances directly from your phone!