elgatrust
Your Current Account Is Not Your Friend, Sorry
We keep money in banks because it’s a safer option than keeping it under the mattress. And that sums up the usefulness of banking system for people who do not understand how it works and how dangerous it can be. Regardless of the incredible amount of debt we (some of us, at least) have, credit cards are still popular, we still buy good using personal finance and happily apply for loans.
On a side note, what do you think about the financial mechanism consumers are constantly being thrown into? While watching TV, during one commercial break you can see both adverts for credit cards and for reducing debt which just makes me feel that we, as consumers, are not fully aware of the consequences our actions. Having said that, I do appreciate that credit cards and other credit facilities are simply tools which can be used for various reasons and it’s the people who tend to misuse the buying power they are given.
Coming back to the topic at hand, I’d like to stress the importance of preparation for the eventuality of personal financial crisis. By that I mean any unexpected money related occurrence which forces you to reach for savings and/or use the emergency credit facilities such as overdraft. It’s better to be safe than sorry so if you haven’t already done that, check out the terms and conditions of your current and savings accounts and estimate how much money is there available for you now. This way you will have an idea of what kind of cash is ready for you without the need to apply for bigger overdraft facility or credit card. The next important thing is calculating how much your current account is going to cost you once problems start.
I have started wondering about this ever since my financial crisis came without any warning and all of a sudden my account was swiped clean. I turned to my ‘personal reserve’ facility, since that’s what it’s for, only to discover that the costs associated with running it are disproportionately high comparing to the amount borrowed. My bank charges me £20 a week for the use of facility which has the maximum credit availability of £150. Furthermore, every payment which bounces off creates additional fee of £8. It seems a bit silly that failed £0.59 app purchase from iTunes in fact cost me £8.59 because of the extra penalty on it. Read the rest of this entry »
Tags: account, elgatrust, personal finance