12 ways to bank smarter: Simple tips and tricks to increase your wealth

Banking can be complicated, with thousands of banks to choose from that each offer an exhaustive set of disclosures and fine print. And then there’s the rates and fees, all of which need to be considered carefully before you sign on the dotted line.

But these tips and tricks can help you bank smarter — so you can earn more money and save time.

1. Reevaluate your bank

The average U.S. adult has had the same checking account for about 17 years, according to a 2023 Bankrate survey. Customers often stick with the same bank if it doesn’t charge them fees or if they feel it would be a hassle to switch banks, the survey found.

“Just don’t fall asleep at the switch,” says Greg McBride, CFA, Bankrate chief financial analyst. “The marketplace is constantly changing with new offers, innovative products and features that might put more money in your pocket or make your life easier. Or both. So it pays to have your antenna up and be on the lookout for something that is a better deal or works better for your financial lifestyle.”

Take a look at the fees you’re paying and whether you can avoid them. If your bank requires a lofty minimum balance, for example, see if there are online high-yield checking accounts with lower minimums to sidestep maintenance fees. These banks also typically offer fee-free ATM withdrawals, plus large ATM networks convenient to home and work.

Bankrate’s best banks of 2023 can help you find the right bank for you.

2. Don’t assume your bank is giving you the best rate

You may feel your bank appreciates you as a customer, but that doesn’t necessarily mean it’s paying a competitive annual percentage yield (APY) on your funds.

“Part of it is people just assume that their bank is going to do — I’ll say, ‘right by them,’ so to speak — and give them what they should be getting,” says Elizabeth Buffardi, a certified financial planner at Crescendo Financial Planners in Oak Brook, Illinois.

The Federal Reserve has raised rates 11 times since March 2022, after keeping them at near zero for around two years. The rising interest rates have caused some banks to increase yields on their savings accounts and certificates of deposit (CDs), making it a good time to shop around for the best rates. With the combination of those rate increases and inflation decreasing, top savings yields are actually outpacing inflation. That means your savings can preserve its purchasing power in those accounts, at least in the current rate environment.

You can find online banks with deposit accounts that pay rates many times the national average.

3. Don’t let a high rate fool you

An account’s APY is the rate you’ll earn per year if the interest is compounded. The APY for savings and interest-bearing checking accounts is often variable, while the APY for most CDs is fixed.

When shopping for an account with the highest APY, read the fine print to see how long the rate you’re being offered lasts. A promotional or introductory rate may be competitive, but could only last for a few months or a year. Also check whether a certain minimum balance is required in order to receive a given APY.

4. Consider a CD for a higher, fixed APY

Today’s top savings accounts and money market accounts can earn a yield of more than 5 percent APY, respectively. APYs haven’t been this high in more than a decade.

In the current rate environment, top one-year CDs generally have higher yields than five-year CDs.

Keep in mind a CD might have a higher minimum balance requirement than a savings account. Also, withdrawing the money before the end of the CD term may incur a penalty, which can take a bite out of any interest you earned and possibly some principal, too. If in doubt, put your money in a liquid savings or money market account instead.

5. Strategically plan your bank interactions

Planning your visit to a branch for nonurgent matters, rather than just dropping by, can help ensure you’ll receive the help you need. If you’re applying for a mortgage, for example, knowing that a mortgage specialist will be there when you go can save time. Another time-saving option is making transactions online, when possible.

When calling a bank’s customer service number for routine matters, try during off-peak hours to help reduce the wait time.

6. Communicate if you plan to close an account

Don’t assume your bank account will automatically close an account if you zero out the balance. Contact the bank to see that the account is closed properly. Also, it helps to move any automatic bill payments over to a new account before closing the old one. The same applies to payments you receive such as direct deposit, Social Security or a pension.

Not closing an account with a zero balance could result in overdraft charges if automatic bill payments haven’t been stopped, which ultimately can hurt your credit and make it more difficult to open other accounts.

7. Closing an account too soon could cost you

Reasons for closing a bank account include moving to a new location, switching to an online bank or finding better rates or a sign-up bonus elsewhere. It pays to know whether there’s a penalty for closing your current account, however.

Some banks will charge you a fee if you close an account soon after establishing it. For instance, both KeyBank and Regions Bank charge a $25 early closure fee if you close your account within 180 days of opening it.

Read the fine print if you wish to close an account soon after opening it. You might decide to avoid an account closure fee by waiting until the designated time frame ends while opening a new account elsewhere in the meantime.

8. Consider keeping your money in multiple banks

You might find the best of both worlds in having accounts at both a brick-and-mortar bank and an online bank.

Many consumers stick with brick-and-mortar banks for the ability to visit a branch for in-person assistance with banking needs. Traditional banks may also have more robust ATM networks, giving you access to cash locally as well as throughout the country or world. Though some online banks have large ATM networks.

A downside to brick-and-mortar banks, however, is they often don’t pay a competitive yield on deposit accounts. It’s common for a traditional bank to pay an APY of 0.01 percent on a savings account, while an online bank can pay more than 5 percent on a high-yield online savings account, making it a smart complement to a branch account.

9. Don’t forget about that card you never use

You may have a credit card that goes unused for long stretches of time. A potential downside of closing such a card is it could affect your credit utilization ratio — the percentage of credit used compared with the amount that’s available — which could ultimately lower your FICO score. But some banks will close a credit card if it isn’t used often enough.

One way to help prevent the bank closing such a credit card is to set up a recurring charge on the card, such as an insurance payment or gym membership.

You might also find you don’t use your debit or ATM card often nowadays, since cash-only transactions are less common and making debit card purchases can mean you’ll miss out on credit card cash back and points.

Making a withdrawal or purchase once every couple of months with your debit card may be enough to keep the bank from closing it.

10. Keep your bank account active

A bank may close your bank account if you aren’t using it often enough, and it may also charge a dormant account fee. Policies vary among banks, but a general rule of thumb is to use your account at least once every couple of months. Keep in mind that small, recurring deposits into a savings account add up over time.

If you have a bank account that has gone dormant, it may have been sent to your state as abandoned or unclaimed property. Check with the state you live in for its abandoned property policies. Supply your bank with an up-to-date address so it can contact you if your account becomes inactive or dormant.

Money sitting in an old account may have a yield that isn’t keeping up with inflation, and it could also be incurring a dormant or inactive fee.

11. Let your bank know when you’re traveling

A declined credit card, debit card or ATM card transaction is the last thing you need when you’re on vacation. Each bank may have different policies, but you may want to err on the side of caution and let your bank know you’re traveling to avoid having transactions declined.

You may be able to report this travel info to your bank through its app, or you can call to relay your travel dates and destinations.

12. Budgeting can help you save money

Knowing how much you spend is vital to achieve your savings goals, and a budget is a road map for getting there.

Creating a budget and analyzing your expenses can help you find areas to trim your spending, such as recurring payments for services you no longer use. Subscription fees and automated purchases can add up over time, and so can annual fees.

A tool that can help you start saving on a budget is Bankrate’s home budget calculator, which allows you to input your income and spending.