Many consumers go through life presuming that they manage their finances well as long as they aren’t mired down in debt. However, money can be constantly wasted on less than astute financial decisions which probably seem of little import, yet can add up to significant amounts over time if the same patterns are repeated. In order to make ones money work for oneself rather than the banks there are some bad money habits which are best discarded.
One of the most wasteful habits is relying on credit cards for cash advances. This is an inadvisable path yet one which many people don’t even register as costly. Cash advances incur high levels of interest from the moment the cash is withdrawn, plus cardholders pay an additional fee for the privilege. Even if the credit card balance is paid in full at the end of the month, unnecessary interest has been paid, negating any benefits which could have accrued from cash backs. Simply organizing cash flow to avoid this often unrealised expense is a good monetary move.
In a similar way using ATM’s which are not affiliated with ones own bank is a further waste of money. If a branch of ones own bank is not conveniently located when cash is required, make use of the free cash back facility that debit cards provide when purchases are made. It may not seem much to pay the occasional $2.50 fee, but over the course of a year the amount adds up and could have been better used.
One of the worst money habits to adopt is to pay to use expensive prepaid cards. Unlike secured and unsecured credit cards, they rarely do anything to help ones credit score. Put simply, consumers are paying for the privilege of using their own money which is a ridiculous scenario. If they are utilized because credit is a dangerous option, then sticking to cash or debit cards prevents unnecessary fees being paid to access ones own funds.
Another bad money habit is being too complacent. Consumers remain with the same banks, insurance companies and mortgage lenders, not out of loyalty but out of habit. Periodically comparing other providers can reap rewards in interest bearing checking accounts, sign up bonuses, reduced premiums and lower mortgage rates. It isn’t even always necessary to move providers if the customer informs their provider of the intent to move and provides details of the competitor’s terms: current providers may well match the rival offer to retain good customers.
Other bad money habits which cost consumers include being disorganized and failing to pay bills on time, resulting in late payment fees; going over ones credit limit or into an unauthorized overdraft; failing to move savings around to take advantage of higher interest rates; and funding high ticket purchases such as vacations through credit cards or loans to spread the cost.
It is entirely possible to not even consider these things as bad habits if ones bills are generally paid on time, leaving the consumer in the black and possessing a good credit score. Nevertheless they all represent monetary waste which could have been avoided allowing a good return to be netted over the course of a year.