Money Management

There was a time when people thought it was normal to stick with the same bank their entire adult lives. Find out why it may be better to switch. 

Studies show that Americans are relentlessly busy. The U.S. is the most overworked developed nation in the world. The few hours most of us have left over each week are spent doing exciting things like mowing the lawn, planning meals, and helping the kids out with their homework.

Perhaps one reason people don’t switch banks more often is because of the time involved in shopping for a bank that will better meet their needs. Still, if you spot any of these four red flags, it’s time to consider a new bank.

1. When fees eat into your balance

If you’ve grown to believe that fees are a normal part of banking, you’re stuck in a mindset that no longer applies. The best banks charge either low fees or no fees at all. Some may charge fees that can be waived as long as certain goals are met. For example, a bank may waive the monthly maintenance fee if you maintain a specific balance in your checking account.

Whether you’re still receiving a paper statement or have online access to your monthly statement, look it over to make sure any fees you’re paying are legitimate. Let’s say your bank charges $2 a month to mail you a paper statement. That’s a legitimate fee (and one you can stop paying by checking your monthly statements online instead). Here are some of the other fees banks charge:

Monthly maintenance feeInactivity feeOut-of-network ATM feeOverdraft feeNonsufficient funds feeCheck feesStop payment fee

Once you notice a fee, jot it down. Before making a decision about whether you’d like to bank elsewhere, ask your bank about ways to get rid of fees. As mentioned, the bank may waive the monthly maintenance fee if you maintain a specific balance. You may be able to get rid of overdraft fees by tying your checking account to your savings account and allowing the bank to move money from savings when there’s not enough in checking to cover a debit.

If you’re still being nickeled and dimed each month, it’s time to stop giving your money away and to shop for a new bank account.

2. When customer service is more hassle than help

My husband and I recently opened new checking and savings accounts in the city we moved to. One thing I did not think to check before settling on a nearby credit union was how easy (or difficult) it would be to call with a question. I had no idea how frustrating it would be to attempt to speak with a live person.

Our new credit union has recently switched over to a chatbot to answer caller’s questions. It’s one of those standard computer programs designed to simulate human conversation — and frankly, it was both creepy and maddening. None of the prompts the chatbot offered fit my situation, meaning I was forced to listen to the menu of options over and over again. When I asked about speaking with a live agent, I’m pretty sure the chatbot laughed. In any case, I finally gave up.

If you’ve been with your bank long enough to know that you’re probably not going to get anywhere with customer service, it’s a legitimate red flag. When it comes to something as essential as your finances, you deserve a bank that makes it easy to find answers when you need them.

3. When your bank no longer fulfills your needs

Given that it’s 2023, one would think that all banks, credit unions, and other financial institutions would offer online banking, including an easy-to-use bill pay feature. Take a moment to consider which features would make your financial life easier. For example, do you need a mobile banking app that makes it possible to check your account balances, pay a bill, or deposit a check on the go? If you’re not getting that, perhaps you’ve outgrown your bank.

The same is true if you need a safe deposit box but your bank does not offer them, or you want both a personal and business account but the bank’s business account comes with too many strings attached.

4. When rates are low

The harsh reality is this: Online banks will almost always offer higher interest rates because they don’t carry the same overhead costs as brick-and-mortar banks. According to the Federal Deposit Insurance Corporation (FDIC), the national APY on savings accounts is around 0.42%.

This table provides a sneak peek at current high-yield savings account rates among online banks.

There’s little doubt that your life is busy, and the idea of shopping for a new bank may be the last thing on your mind. However, if changing banks means having more money to save for retirement or take a vacation, the time spent will be well worth it.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Ally is an advertising partner of The Ascent, a Motley Fool company. Dana George has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Shedding a vehicle and its costs could work wonders for your finances. Read on to see if you’re ready to ditch your car. 

Owning a vehicle is hardly an inexpensive prospect. Between maintenance, auto insurance, and other expenses, the average cost of having a car reached an astounding $10,728 last year, according to AAA. That’s almost $900 a month.

Now, think about what an extra $900 a month might do for your finances. It could be your ticket to boosting your savings account balance, paying off debt, and having more cash on hand for leisure and fun activities. So if you’re able to unload your car, the upside could be huge.

Of course, functioning without a car can be easier said than done. But here are a few signs that you may be ready to live a car-free existence.

1. Your job has become 100% remote

Many people’s jobs went remote during the COVID-19 pandemic. But over the past year, a lot of workers have slowly made a return to the office, either on a partial or full-time basis.

Some employers, however, have maintained their remote setups. Given the cost savings of not having to rent out office space, that’s understandable.

If your job is still 100% remote and you expect it to stay that way for the foreseeable future, then you may no longer need to keep a car around if the main reason for having one was to get to work. If you only need a car on occasion — say, once a week for errands or social events — then it could be far more cost-effective to use a ride-hailing service if you need a ride. Even if this costs you $100 a week, and your total tab there is $400 a month, that’s less than half of what it costs to own a vehicle on average.

2. You do most of your shopping online

Even if you don’t need a car for work, you may like having one to hit the supermarket when you need to. But if you’re someone who mostly orders groceries online and you can’t remember the last time you picked out your own produce, then you may not need a car any longer.

Similarly, if you tend to order loads of items on Amazon to avoid hitting the mall or your local Target, then you may not need a car for the occasional errand — not when you can simply use a ride-hailing service for those one-off occasions where you have to do your shopping in person. And while having a car may be handy in the context of meeting friends at a restaurant, you could work around that by choosing places within walking distance or simply asking for rides.

3. Your kids are older and are easier to bring on public transportation

Just because you live in a city with public transportation doesn’t automatically mean you don’t need a car of your own. If you have young kids, for example, it’s not exactly easy to wrangle a stroller on a train or bus.

But if your kids are older, it may be easier to get around town using public transportation. And in that case, you may not need to bear the expense of a car.

Plus, if you live somewhere with ample public transportation, chances are, you’re in a city where parking is either tough to come by or expensive to pay for. So that’s another good reason to get rid of your vehicle if you can do without it.

Functioning without a vehicle isn’t always feasible. But if you live in an area where you can get around via public transportation or on foot, and you don’t really need a car to work or shop, then it could pay to unload your car and enjoy the savings.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Maurie Backman has positions in Amazon.com and Target. The Motley Fool has positions in and recommends Amazon.com and Target. The Motley Fool has a disclosure policy.

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Don’t be your own worst enemy. Read on to see how you might be sabotaging your finances in a really big way. 

We all want to feel financially secure — even if that means different things to different people. And there are different steps we can take to attain financial security. But part of that means doing our best to avoid major blunders that have the potential to do a lot of harm. Here are three ways you might be damaging your finances without realizing it.

1. You’re waiting to invest until stock values come down

The stock market has had a pretty strong year. The S&P 500 index, which is generally considered a benchmark of how the market is doing on a whole, is up almost 17% year to date as of this writing.

Because of this, you may be inclined to keep your money out of the stock market so you can wait for prices to come down before adding more assets to your brokerage account. But in doing so, you could be missing out on a big opportunity to put your money to work immediately.

A better bet? Don’t try to time the market. It just doesn’t work. Instead, invest on a regular basis if that’s something you can swing financially.

A good bet is to set up an automatic transfer to your taxable brokerage account or IRA and commit to a regular investing schedule. It’s true that the S&P 500’s value might decline at some point from where it is today. But over the past 50 years, it’s delivered an average annual 10% return. So if you’re investing on a long-term basis, you don’t have to worry about how exactly the stock market is doing today.

2. You’re not maintaining an emergency fund

You might do a good job of keeping your expenses pretty low relative to your income. But that’s not enough. You also need cash reserves in case there’s a random month when an unplanned bill comes your way.

A good 63% of Americans don’t have enough money in savings to cover an unplanned $500 expense, says SecureSave. But if you don’t leave yourself with any savings, you’ll be vulnerable to credit card debt the next time an unplanned bill arises. That could force you to lose money to interest and make it hard to bust out of that cycle.

The general convention is to try to maintain an emergency fund with enough money to cover three months of essential expenses at a minimum. But if you’re starting from a place of not even having $500 to your name, that’s obviously going to be a long road.

In that case, do your best. Save $50 next month, $60 the month after that, and $70 the month after. You may not be able to go from, say, $300 in your savings account to $6,000 in savings in 12 weeks. But maybe you can go from $300 in savings today to $900 in savings in a year, thereby tripling your cash reserves.

3. You’re pushing yourself to buy a home even though you can’t afford one

Some people will tell you that renting a home is the same thing as throwing money away. It’s not.

Not only is renting not necessarily a mistake, but it’s far less of a mistake than stretching your budget to purchase a home you can’t afford. If you take on too much house, you might end up in a situation where it becomes difficult to pay not just your mortgage, but your bills on a whole.

Falling behind on bills could damage your credit. And if things get bad enough where you end up losing your home to foreclosure, guess what? You’ll be looking at a black mark on your credit report for seven years. Ouch.

Instead of giving into the pressure to buy a home, buy one when you’re ready. And if you don’t think you’ll ever be ready, keep renting. It may be just the thing that allows you to better manage your money because your costs are nice and fixed during each lease term you sign up for.

We’re all human, and we all make mistakes. You might think you’re doing the “smart thing” by buying a home rather than spending money on rent, and you might assume you’re being savvy by trying to time the stock market. You may also feel like you don’t need an emergency fund since you have a steady job or relatively low expenses. But do your best to avoid falling victim to the above blunders, because they do have the potential to cause their share of long-term damage.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Getting a low appraisal can shatter your hopes and possibly kill a deal. Learn what you can do if your home is valued lower than what you expected. 

A home appraisal is a licensed professional’s opinion of your home’s value. It’s based on research, market data analysis, on-site inspections, and, yes — subjective judgment. So much depends on a home appraisal (from keeping a deal intact to securing enough financing for a home equity loan) that if it comes back lower than you were expecting you have plenty of reasons to feel concerned — and downright disappointed.

For their part, home appraisers are experts at evaluating homes. But they’re not immune to making errors. And if your appraisal came back lower than you were expecting, here’s what you should do.

Inspect the appraiser’s report for errors

While appraisers are known for being meticulous, putting an extra set of eyes on their reports can help prevent tiny errors — like miscalculating square footage or omitting new renovations — from bringing down their estimates.

Appraisers typically send reports to lenders and loan applicants, whether that’s a homeowner getting a refinancing loan or a buyer trying to secure a mortgage. If you’re selling a home, however, you may have to request a copy or get one through your buyer. It’s a good idea to inspect this report with your real estate agent, as they may have an eye for details you wouldn’t otherwise catch.

Look closely at the comps

If the appraisal report is free from errors, you might still have a chance at disputing it by asking your agent to evaluate its comps.

Comps (or “comparables”) are recently sold properties that share features with the home being evaluated. They’re located in the same area, sometimes in the same neighborhood. For example, four houses of roughly 1,500 square feet, two bedrooms, and two bathrooms might be considered comps for a fifth house being sold on the same street. If your agent finds these comps to be inadequate, you might have a chance at disputing the low appraisal.

Consider racial bias

The U.S. Fair Housing Act of 1968 protects homeowners from discriminating appraisals. That means, if you believe your appraiser’s opinion was influenced by preconceptions of race, color, sex, disability, religion, national origin, or family state, you can file a complaint with the Consumer Financial Protection Bureau (CFPB) and dispute it.

The sad truth is that it’s not rare for homes within communities of color to receive lower appraisals than comparable houses in white neighborhoods. According to research by Dr. Junia Howell, sociologist at the University of Illinois, homes in white neighborhoods are often judged to be double the value of comparable homes in communities of color.

If you believe your appraiser was influenced by racial bias, contact the Property Appraisal Valuation Equity (PAVE) taskforce and connect with a fair housing specialist.

Submit a reconsideration of value

If you have compelling evidence to suggest the appraiser’s original report was mistaken, missing information, or influenced by racial bias, then you should submit a “reconsideration of value” (or ROV) to your lender. Most top-rated mortgage lenders will then review the ROV promptly and convey it to the appraiser for their consideration.

If you’re selling a home and not the applicant on a home loan, you may have to work with a buyer or their agent to put together a ROV. Depending on the errors in question, some lenders may request an appraisal from a second appraiser, especially if the first was influenced by a bias.

It’s not unusual to discover bias or mistakes at the root of a low appraisal. But if your appraisal comes back clean, the problem could be within yourself — high expectations or overvaluations could have led you to believe your home is more valuable than the market says. You could request a second appraisal, which will cost you, but at the end of the day if your home is valued lower than what you thought, it might be best to accept it and find a way to adjust.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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