Payday Loan Customers Need Banks, Too
Using currency exchanges
Some people use payday loans, money orders and currency exchanges regularly. Some of these people don’t have bank accounts. They need to take care of payments and borrowing, but just haven’t committed to a financial institution yet. If you are one of the millions of people without a bank account, you may be needed services that a currency exchange can’t provide. They don’t take personal checks at all. Payroll checks are limited and there is a long verification process. It’s shortcomings like these that push people to get a bank account, rather than having to work around the pitfalls of their finances.
Finding a bank
When it comes to finding the right financial institution, there are some things you should look at. Here are some important notes on banks to understand.
- Reliability. The Federal Deposit Insurance Corp covers accounts up to $250,000 per depositor, per bank. That means that if the bank fails, which is rare, your investment is covered up to that amount. The same holds true for credit unions. The National Credit Union Administration is the government agency that insures your money there.
- The account. There are a wide variety of accounts banks promote. If you need everyday flexibility like merely using checks, then a basic account may be the best option. There are accounts with no minimum balance that can serve you well. On the other hand there are NOW accounts. These are the ones that earn interest on your money as long as you sustain a minimum balance. Usually the higher the required balance, the larger the return.
- Your bills. Find a bank that is accessible online and has some extra features. You want a bank that has tools to help you manage your money. That means documents on the true cost of a car, payday loans or mortgages, should be available to you. You should be able to customize the amortization schedules to your particular case.
- The Details. Ask your banking officer for a description of each type of account they offer and a brochure. Sometimes it’s best to take the information home to decide exactly what product you want Make sure that you understand the fees and penalties. For example, some banks charge you for falling below your limit on a daily basis. So if you overspend $10 at a rate of $9.99 a day, you could end up paying $30 in fees it if takes you three days to get the funds to your account.
- NSF Fees. Most banks cover you up to a certain amount if you do write a bad check. This may sound like a good idea, but it can be costly. If you go below zero, the bank will payout the money, but you’ll be charged a $30 fee and daily fees until you deposit the necessary money. Beware of how quickly a small mistake can be if you write an over-balance check.
- Savings. The savings you get from a bank can come in the form of interest. You aren’t putting your money in your wallet, but rather putting it to work with you. Shop around for the best deals and the best returns available. For example, CDs, certificates of deposit, are great tools to build your wealth. Their interest rates are dependent on the amount you put in them. Remember though, with CDs, you can’t take your money out for the specified amount of time without a penalty. These lengths of time can be anywhere from 3 to 48 months.
Go to a bank
There is a lot more to know about a bank, but these are the basics. Be sure to sit down with a financial officer and understand what you are getting into. Banks are highly convenient, and can help you get financing when you need it. Though currency exchange stores can handle payday loans, money orders, and faxing, there are still many other services out there. Do some research, but get a bank account. It’s the easiest way to build a return on your money.