As you look for ways to cut your expenses and increase your savings, take a close look at each of your budget categories in turn. Today, we’re going to look at how you can save on costs and fees from financial services, by changing a few habits or looking around for comparable deals.
Here are a few tips to get you started:
Shrink credit card interest charges by paying down your balances. If you have a credit card, take a moment to look at the your total interest charge for the month. This figure is easy to gloss over on your statement, which makes it all the more important to track in your budget system.
Your goal, in cutting expenses, is to shrink that interest charge. The best way to do this is to pay more than the minimum due on your credit card—in fact, pay as much as you can spare. You need to reduce the principal amount owed on the card, in order to reduce the interest. In the short term, this will mean increasing your monthly expenses, but in the long term, you will be rewarded with extra space in your budget.
Avoid credit cards with annual fees. It’s possible to find credit cards that don’t charge annual fees, so don’t apply for this kind of card unless you’ve exhausted your other options. If you don’t use this card throughout the year, or if you pay down balances immediately, you will still be charged the annual fee.
A possible exception to this is a card that provides rewards, but even in this case, you should carefully check the fine print to make sure that the rewards justify the annual fee. Will you be using the card often enough to earn rewards that surpass the fee itself? Will you repeat that behavior every year for as long as you have the card?
If you currently have an annual fee credit card, call your credit card provider and ask about what you can do to have the fee waived. You can consider canceling the card if your total credit balances are very low and you don’t need the credit from this card. Just remember that your overall available credit affects your credit score, as does the length of time you’ve had accounts open. Weigh those factors against the fee to decide what’s best for your finances.
Avoid ATMs that don’t give you free service. You may have a habit of using your debit card at ATM machines that charge service fees. Your financial institution may also charge you for using an ATM machine outside of their network. These fees seem small, but they can add up, and every penny counts. Take the time to plan out your cash withdrawals so that you can avoid these fees.
Look for better terms on your checking and savings accounts. Are you paying any recurring fees, such as monthly charges, on your current accounts? Were you charged for a balance falling below a minimum amount, or do you have any add-on features to your accounts? If so, it may be time to shop around for a new account that has smaller fees. Look for options both within your current institution and with other financial institutions.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years experience in retail banking and with financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at firstname.lastname@example.org.