[English] 12 basic banking mistakes no one should make

By Emma-Lou Montgomery, writing for MSN Money
March 02 2009
With economic uncertainty in the air, the last thing you want to do is throw money away.
To ensure you keep hold of as many pennies as you can, we've come up with a list of the 12 most common - and avoidable - banking mistakes. Check to see if you are falling prey to any:
1. Paying monthly fees if you don't need to
So, you pay £7 a month for your current account and get breakdown cover, annual travel insurance and mobile phone insurance for "free".
The thing is, you don't have a car, you always forget you've got insurance and buy another single trip policy (or take the travel agent's free insurance offer) and you have free mobile phone cover included with your phone contract.
So what you're getting for your £84 a year is ... nothing. It's a total waste of money. Switch back to the plain-and-simple, no-frills, basic account straight away and spend the £84 on something useful.
And, beware of accounts that don't charge a fee, but do penalise you if you don't do as asked.
For instance, you get a lot of accounts that requires you to deposit a certain amount each month, or maintain a certain account balance. Fail to do so and that monthly fee kicks in. Again, switch to another account that suits you better and save your money.
Compare the top current accounts online
2. Not checking your statement
If bank or credit card statements come through the post and you shove them unopened in a drawer you're committing a cardinal sin.
It's the same if you get the e-mail saying your statement's available online, but you never take a look at it. It's imperative that you check your statement regularly.
This means you've a better chance of spotting any erroneous or fraudulent activity sooner rather than later and also means you keep up-to-date with your real financial situation. Check your statements - regularly.
3. Not shredding/protecting your financial information
One of the simplest and most common ways fraudsters gather the data they need to steal the identities of their victims is by sifting through discarded paperwork.
As more people recycle, more and more of us are leaving invaluable data lying around in bins and collection boxes for thieves and fraudsters to pick up and use.
It's not just bank and credit card statements that need to be shredded, but utility bills and anything else you might call "junk mail". Take that letter telling you you've been pre-approved for a credit card: you quite rightly bin it, but you should have shredded it first.
And while you're at it, make sure you don't leave your financial data lying carelessly around on your desk at work, in an open bag or brief case or at home near a window.
What a criminal needs to steal your identity
4. Being careless with your Pin
Writing it down is a no-no, we've all got that message (or so you'd hope). And when you're at the check-out or using a cashpoint you shield your number from prying eyes. We know the importance of that too.
But having the same Pin for every card is just as bad. Because all it takes is for a fraudster to crack it and they've got access to everything.
And if you're one of these people who bemoan the fact that we have to remember "so many numbers", make your life simpler; ditch all but one of your umpteen credit cards and you'll safeguard your financial health at the same time.
5. Paying for online purchases with a debit card
In this environment where companies seem to be going bust on a weekly basis, the only safe way to pay is by credit card. That way if they do go bust and fail to deliver what you've paid for you can reclaim the money through your credit card company.
There's another reason too though. If someone makes fraudulent purchases with your card - as long as you weren't wilfully negligent in protecting it - you won't end up having to pay for it yourself.
But if they do that with your debit card it could be a different story. Because the first thing you might know about it could be when you find your entire account cleared out. Even if you get some of the money back it could mean you're out of pocket, payments aren't made and direct debits bounce - not to mention the fact that you can't get your hands on any cash.
Sign up free to check your credit report for suspect activity
6. Accessing your bank account in a public place
If you log on to your bank account from a computer in a public place, such as a library or an internet café, or you wirelessly connect your laptop to a network at a coffee shop or in an airport lounge you could be jeopardising your financial security.
Most open networks, such as those offered for free in many public places - including airports, coffee shops and even hotels - are unsecure. Anyone with access to the same network could steal information just by logging on.
That may not be such a big deal if you're just browsing Facebook, but is less good if you're tapping into your bank account.
7. Leaving your cash in a current account when it could be earning interest
Interest rates aren't what they were, but better 2% in a savings account than 0.01% in a current account. Stay on top of your finances and shift your spare cash into a savings account immediately.
If you need to know you can access the cash immediately, then go for an internet account. Use a bank that uses the faster payments system and the transfer will be same-day, if not instantaneous, between your two accounts.
The best-paying savings accounts
8. Trusting any bank with more than £50k of your money
Anyone who has more than £50,000 in any one bank account, or with any one banking group, is taking an unnecessary and potentially costly risk.
The government has guaranteed that if a bank goes bust it will repay up to £50,000 per person, per account (or group of accounts). That includes interest accrued and means that joint account holders are guaranteed to the tune of £100,000.
Gordon Brown has talked of raising the limit again, in line with a proposal for all European Union countries to guarantee personal deposits up to the value of €100,000 (about £77,500) but as it stands at the moment, if you have more than £50,000 with one bank, you should move the surplus to another institution.
9. Remaining loyal
Loyalty doesn't pay. If you want the most competitive deals you have to shop around and take your money to where they'll look after you best.
It's a fact that statistically we're more likely to get divorced than change our bank. But it's simple to switch. You could earn £100 in the process and you could also save hundreds of pounds a year more by switching to an account that offers things like a free overdraft.
Switch to a top current account deal
10. Using a fee-charging cash machine
According to the Link website, more than 96% of cash machine transactions in the UK are free. The other 4% incur a fee - typically between £1.25 and £1.75 a transaction.
Fee-charging machine aren't new, but we still haven't learned we don't need to pay to get our hands on our own cash.
Some £7.4 million of cash withdrawn in December was from fee-charging machines - it may be a fraction of the £243 million withdrawn from free machines, but it's still a nice little earner for the ATM owners. Plan ahead and withdraw your cash for free.
11. Bouncing Direct Debits
Paying by Direct Debit has become the preferred mode of payment for all sorts of things, from gas and electricity bills to credit card payments.
Some companies even penalise you for not signing up to pay by Direct Debit. Used properly it can save you money (utility companies offer discounts for paying by monthly, for instance). And if you juggle umpteen payments a month, setting up a direct debit can stop you from incurring late payment fines, should that month's payment slip your mind.
But there's a flipside too. If there isn't enough cash in your bank account to meet a Direct Debit you could get hit by charges from both the bank and the company you were meant to be paying, who will deem it as a late or even non-payment.
The charge applied can only be as much as it costs for the company to chase and collect late payments, but it's still an expense you don't need to incur.
12. Going overdrawn
Finally, the oldest and most common mistake in the book is going into the red. If you're always overdrawn then you need to take a look at your cashflow and find a way to get yourself back into the black.
Overdrafts, especially unauthorised ones, are one of the most expensive ways of borrowing money. If you are really deep into the red and know you have no way of clearing the debt swiftly you may be better off switching it to a loan and making a concerted effort to clear it at a fixed rate, within a determined time-frame.
If all you do is dip into the red now and again, then switch to an account that offers a free overdraft. But beware of accounts that offer a small overdraft fee-free, because they often hit you with a whopper once you've exceeded the limit. And of course, take a look at your spending to see whether you can, in fact, avoid getting overdrawn at all.
See if what you could save with better budgeting