Accounts that work

Now that you have an understanding of how credit works, you can start to work on your bank accounts and credit card accounts.  This should be fairly simple, so I'll try to keep it as short as possible.

Checking Account

I consider my checking account the foundation for anything I want to accomplish financially.  The key is to make sure that you have a checking account that is working for you.  This means 1) you don't get charged any fees, 2) it's easy to use and manage online, and 3) maybe even earns you interest.  If you're still using a student checking account but you're not a student....why?!?

Finding an account that works for you is easy.  There's this thing called the internet that makes it very simple to search for and compare checking accounts in a matter of minutes.  It also helps to ask friends if they have any bank accounts to recommend!  In fact, I "found" my current checking account through a friend.  It's an account that, understandably, isn't advertised very much because it's through a smaller local bank and offers great benefits if you can meet the requirements.  Here's why I like my account and also what you should look for in any account:
1) there are no annual fees
2) there are no fees if I meet the monthly requirements (simply use the card as a credit card 12 times a month and keep a small minimum balance in it)
3) online bill pay and statements
4) it pays me interest, and lots of it!

I earn a 4% APR on the average monthly balance in my checking account.  I've been experimenting with this one by putting some of my savings into this account and using it as a combined checking/savings.  I'd only recommend this if you have a monthly spending plan and self control!  However, if you would be able to follow a similar plan, it would definitely pay off.  I've earned roughly $20 per month in interest alone for the previous 4 months that I've had this checking account open.  In case you're wondering which account I use, it's MB Financial's Red Checking account.  Comment or email teachmerich@gmail.com if you have any questions about it.

Bottom line, find an account that works for you.  If you already know you have no restraint and would spend all of your savings if you tried this, then get a free checking account with a good website that lets you see what you're spending.  Online checking accounts are rapidly becoming popular for these reasons.  Check out ING, Capital One, or Schwab.  Each offer online checking accounts with various benefits!

Credit Cards

I have a very simple approach to credit cards.  I stick with two or three that are very easy to use and never charge me any annual fees.  Annual fees are okay for very few people.  For instance, if you spend a lot on travel and find a credit card with travel rewards that would actually help you save money, then an annual fee may be worth your time.  You'd have to do some research and comparisons, though, to find out if it would work for you.

I keep a Capital One credit card in my wallet because I've had it forever and I've got a good credit limit on it.  Both of these help to improve my credit score.  I don't worry much about the interest rate because I pay it off in full every month.

If you're carrying balances on credit cards, you have to do two things.  First, call the customer service number and get them to lower your rate.  Don't take "no" for an answer.  Tell them you've been a customer for a while and need a lower interest rate.  If you get a representative who won't budge, tell him/her that you'd hate for them to lose your business over this and that you could easily transfer to a card with a 0% introductory rate.  That's just for emergencies...I don't actually recommend transferring balances to new cards.  It's a tricky game and messes with your credit because you are opening new accounts.

The second thing you have to do is work toward getting that credit card paid off and keeping it that way!  Once I got my credit card account paid off, I arranged for a couple fixed bills to be paid each month through my card.  For example, my cell phone bill is the same each month (fixed) and it automatically gets paid by my credit card.  That's getting into different topics for another day.

Plain and simply, find a credit card that works for you.  Typically, the credit card offers you get in the mail are for cards that don't work.  Again, search for credit cards online.  If you don't know where to start, type "credit cards" into Google and go from there.  There are multiple sites that let you compare cards and will help you find one that works for you!  Remember: low interest rate, high credit limit, $0.00 annual fee, and a good website that allows you to manage the card online are all things that I would recommend.

You know what to look for in your accounts now.  These are the most basic and important things to look for in checking accounts or credit cards.  Put this information to good use and go find accounts that work for you!  It'll make your financial life easier and you won't regret it.

Comments, questions, suggestions? teachmerich@gmail.com