This guest post is from Dean, who is perfecting The Art of Stinginess.
In running my blog, The Art of Stinginess, I often sit back and ponder the world of frugality and personal finance in general. One thing that really grinds my gears (mostly because many of us can do very little about it) is how banks takes a few bucks each time we receive my payments.
I’m not going to rant and rave about that, it happens to us all, what I will rant and rave about is the often overlooked alternative. Online banking.
The public perception of a bank is a tall granite building where you entrust the good people who work there with your hard earned cash. I guess the ‘Bricks and Mortar’ image of a bank brings with it some peace of mind. However, since I started using an online bank (Rabo Direct) for my business and regular domestic expenses, my perception has been turned upside down.
As I said above, the first and most obvious tollgate for your money in the banking system is when it reaches you bank account. Say I complete an article and I’m transferred the money by the publisher. Just like that they’ve shaved off a couple of Euro. You’d think during a recession the bank would be happy with my money as it is.
Well online banks (most anyway) don’t charge you a cent for receiving money. It just flies right in there and the number on your screen goes up by the right amount. No ‘processing fees’ or ‘International transaction charges’.
The second toll booth where we have to unwillingly fork out in the traditional banking system is when we start moving our money around. Paying bills, transferring to savings accounts, direct debits and paying your own employees should you be lucky enough to outsource, all requires you give the bank a cut.
Well, I’m pleased to say that when I’m using my online bank account to pay my bills and transfer money I don’t get charged a dime. And once again, most online banks are the same.
The only plus with ‘Bricks and Mortar’ banks is that you can stroll in and withdraw your money, either from an ATM or at the cash desk. However, chances are you’re being charged for this too in your quarterly banking charges. I recently got mine and for just three months I was charged EUR23 for lodging a few checks and withdrawing money from an ATM once a week.
How to Use Online Banks Properly
The main tip you can be given concerning how to use you online bank account is to route your money appropriately. Send any money you’re going to need to spend in the real world (i.e. on food, clothing etc..) to your day-to-day bank account directly from the course (ex. PayPal or Checks). Direct the rest to your online account and use it to pay bills, invoices, direct debits and the likes. Thus you’re avoiding the bulk of the bank charges.
I guess there’s one final argument to be made against having an online bank account; the bother of it all. This argument is normally made by people who are unfamiliar with it and may not be to keen on the idea. But online banking is now so much easier and convenient than doing it all in person and it really does save you money.
Oh and I almost forgot, with interest rates 1-2% higher than normal bank accounts they can earn you money too.