What does your Bank do for you

What does your Bank do for you?

For most people your bank is there for your employer to put your wages and for you to set up direct debits and standing orders for money to go out. Your bank also gives you a card to which you can draw money from a cash machine or make payments at shops without the need for having cash with you. But what else does it do?

Savings

Most current accounts will have a percentage of interest that they will pay monthly dependent on the balance when the interest is calculated. Normally this amount of interest is incredibly small in comparison to those that can be offered by "Savings Accounts" that are available from your same bank. If you are in the fortunate position that you're current account balance is of a healthy size then you could probably earn more interest from this money by placing it elsewhere. Contact your bank and see if they have a Savings Account or High Interest Account to place your money - it might be worth placing a standing order that automatically transfers some of your wages every month into this account so as to build your savings and earn extra interest from them.

Don't be complacent with what your current bank has to offer. Shop around and search for a better rate of interest. You can still set up a standing order from one bank to another so do not feel you have to stay with your bank to allow standing orders to work. The internet is a powerful tool that will allow you to be able to shop around for a better rate of interest. Some banks offer special internet rates so it is worth spending an amount of time hunting for a high interest account.

When checking Savings Accounts or High Interest Accounts make sure you read the terms and conditions. Some accounts of this type have limitations on a minimum amount you can place in them every month or year. Some accounts will also have a "notice period" that you have to give if you wish to withdraw money from these accounts. So think carefully about how much you can afford to place into these accounts monthly and how readily you may need this money in the future. It may be worth going with a bank that has a slightly lower rate of interest than another if it gives you instant access to your money as apposed to an account that is a higher rate but requires you to give 90 days notice.

Overdrafts

An overdraft is a facility where a bank lets you go a pre-determined amount over what is available in your current account. Overdrafts can be extremely handy for emergencies and as a type of protection if you temporarily lose track of what money is coming out of your account. Most of the time your bank will charge you a small amount of interest for going into your overdraft but normally this is cheaper than the amount you would be charged if you were to use a credit card.

If you do not have an overdraft it is worth discussing getting this facility with your bank. If you accidentally spend more than is available in your account and you do not have an overdraft facility the costs can be frightening. You may not only get charged an amount for every day you are overdrawn but also get charged an overdraft fee for going overdrawn in the first place.

The important thing to remember is do not rely on your overdraft - as it is not your money and you will be charged for using it!

Mortgages

Most banks offer the facility to borrow money - some at very competitive rates. For homeowners this can be in the form of a mortgage. Many people when needing to borrow money will simply just look at their bank and nowhere else. This isn't always the best idea as the mortgage market is incredibly competitive and should be searched before deciding on which one is right for you.

Mortgages should be carefully considered before being entered into. They are often a long term financial package and you should be sure that you have got the best deal for your circumstances before deciding on which one to go for.

Credit Cards

There are many companies that now offer credit cards but your bank will probably offer you one as well. Credit Cards are a complicated world but you must always look out for deals that will suit you best. A low rate of interest is always a must.

You need to consider what you will be doing with your card. If you will be making lots of purchases on your card then look out for deals that will allow you 0% interest on purchases for a period of months. If you are not going to use your card at all and you simply want to transfer your balance then look out for deals that will allow you 0% interest on balance transfers for a period of month. If you are transferring a large balance make a note of the balance transfer fee that you will be charged - these tend to be a % of the balance you are transferring but can range enormously so look out for a low balance transfer fee.

Loans

Most banks offer the facility to borrow money - some at very competitive rates. These loans can often be Secured or Unsecured. Many people when needing to borrow money will simply just look at their bank and nowhere else. This isn't always the best idea as the loan market is incredibly competitive and should be searched before deciding on which one is right for you.

Secured Loans from your bank would be like any other secured loan. You would need to be a homeowner and fit the relevant criteria that the bank stipulates. Generally the rates can be more competitive due to the bank having the security of your home. The amount of money you can borrow is generally more with a secured loan as is the term to which you can borrow the finance.

Unsecured Loans are generally smaller short term loans and can sometimes be more expensive than secured loans due to the risk involved because there isn't security for the finance. Customers often find unsecured loans harder to get because the criteria that banks and lenders set is tougher to meet than that of secured loans.

Internet Banking

Internet banking is extremely useful for keeping check on your money and can also be used to make payments from one account to another. With many banks you can also keep track of your mortgage online. The majority of banks will offer internet banking free of charge but it is worth checking with your specific bank as to what exactly they offer.

Direct Debits & Standing Orders

Direct debits make the paying of bills extremely easy. Setting up a direct debit with companies can save you hours of time every single month and also helps you so you do not miss any payments - therefore acting as a safe guard to protect your credit rating.

Standing orders can be used to direct some of your money every single month into another bank account or to be placed into savings accounts.

Both facilities are generally widely available with most banks.

Charges

Inevitably you will be charged by your bank if you go over your overdraft limit or write a cheque when you do not have the funds to pay it. Generally speaking though most current accounts are free and providing you keep in order with them and don't spend money you don't have you shouldn't be charged anything.

Other Facilities

Banks can also offer Business Accounts to established businesses and to those just starting out. They are able to look at Pensions and some banks have access to many Insurance products.