automatic payments

Autopay Is Great for Money Management — Until It Starts Costing You

Emily Guy Birken — Fri, 27 Oct 2017 08:30:08 +0000

I'm a big believer in the set-it-and-forget-it lifestyle. I have cleaning products and paper goods delivered to me monthly via an automatic subscription, so I never have to think about whether we're running short on laundry detergent or toilet paper. I've set up automatic transfers to savings and retirement accounts each month, so I never have to think about building my emergency fund and my nest egg. And I have several of my bills automatically paid out of my checking account so I never have to remember a due date. (See also: 5 Ways to Automate Your Finances)

Of course, what I love about all of this automation is exactly what makes automation potentially costly: When you don't have to think about something, you might end up forgetting about it.

While automatic payments allow you to effortlessly stay on top of your bills and other financial obligations, they can also become a budget leak that you aren't even aware of. Here's what you need to know about the downside to automatic payments, and how to make sure you don't automatically waste your money. (See also: 7 Ways Auto-Payments Can Screw You)

Automatic payment or gray charge?

Automatic bill payments that you've willingly signed up for can be a great way to manage your money and avoid late charges. But some automatic payments are actually what's known in the industry as "gray charges."

These are little recurring automatic payments that you have not necessarily agreed to and do not know about. For instance, I had to deal with a gray charge earlier this year when I realized (after several months had gone by) that I was being charged twice a month for a single digital newspaper subscription service. It turned out that each of my two subscriptions was associated with a different email address, and I had not realized I'd accidentally signed up for the second subscription.

I have no one to blame but myself for that unnecessary subscription charge, but most gray charges have much more pernicious origins:

"Free" trials that require a credit card: With this type of gray charge, the merchant is counting on you to forget that you provided a credit card to sign up for a free trial. Once the trial period ends, the merchant charges your card. These types of charges account for nearly half all gray charges.
Phantom charges: These gray charges piggyback on an online purchase you did make. With these types of charges, you might be charged for an extra product or service that you didn't request. For instance, a consumer might pay for their credit score without realizing they have also signed up for (and will be charged for) monthly credit monitoring. Phantom fees account for 18 percent of all gray charges.
Zombie charges: These types of gray charges are well-named, since they are the automatic payments that simply will not die even after you cancel your subscription or membership. A common example of a zombie charge is the gym membership fee that is charged to your credit card even after you have quit the gym. Zombie charges account for about 6 percent of gray charges.

The high cost of forgotten automatic charges

According to a study by Aite, gray charges on credit cards accounted for more than $14 billion in 2012, which translated to approximately $215 per cardholder.

It's completely understandable how this can happen. Often consumers will agree to a charge without realizing it because they did not read the terms of service. At that point, it's up to the consumer to notice the recurring charge on their account — and it often takes several months before the cardholder notices. By the time consumers realize what has happened and cancel the service, it often seems pointless to try to reverse the previous months' charges.

In addition, the majority of gray charges are perfectly legal, which means it can be next-to-impossible to get previous months' charges reversed. The companies that are using gray charges to pad their bottom lines are counting on the apathy and inattention of the average cardholder, and they unfortunately have the law on their side.

Combating gray charges

There are several options for keeping unnecessary automatic payments from taking a bite out of your budget.

1. Calendar reminders can keep you from paying for "free" trials

The companies that offer "free" trials assume that you will forget when the trial period ends — and they already have your payment information. The best way to take advantage of free trials is to set up a calendar reminder for the day before the end of the trial. That way, you'll remember to cancel the subscription a full 24 hours before you might get charged.

2. Read through the fine print

Skimming through the terms of service may be no one's idea of fun, but it's a lot better than having to make an angry call to customer service several months later and several sawbucks poorer.

3. Research complaints about phantom charges

Before you buy, Google the company whose product or service you are considering to see if anyone has had trouble with phantom charges from them. Then you'll know what to look for in the terms of service and you can determine if you can avoid charges by unclicking a box — or just choosing a different merchant, if necessary.

4. Review your statements regularly

Making a monthly date to look over your credit card and bank statements will help you identify gray charges as soon as they occur. You can call to cancel these subscriptions or notify your credit card that you would like to dispute the charge. In many cases, your credit card company will reverse the charges if you can prove that you did not consent to recurring charges.

5. Use apps to monitor your accounts

If you would rather not the spend the time combing over your accounts and canceling unnecessary automatic payments, there are several apps available that will do the work for you. Clarity Money helps you organize your entire financial life, including helping you to find and cancel unused subscriptions. Trim identifies recurring payments that can be canceled and will take care of contacting the merchant on your behalf to do so. Truebill notifies you of subscriptions that can be canceled and offers you a one-click cancellation process.

Stay on top of your automatic payments

Automatic payments are a major boon to busy budgeters. But it's important to remember that your automatic payments should be like the cruise control on your car: It can relieve you of a little work, but you can't fall asleep at the wheel. No matter how automated your financial life may be, you need to still keep an eye on things to prevent automatic payments from causing a financial crash.

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This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Money Moves Every New College Student Should Make

Emily Guy Birken — Tue, 29 Aug 2017 09:00:05 +0000

College is about more than just getting a degree. For many new college students, starting this phase of education is also a time to learn any number of important life skills, from proper laundry care to time management.

However, many college students often overlook one important life skill: money management. As a college student, you might assume that money management isn't important, since you've got so little money to manage.

Unfortunately, neglecting your money skills in college could have lasting negative repercussions throughout your adult life. Rather than assuming you'll sort out the money stuff "later," get off on the right financial foot by following these money moves when you start your college career.

1. Open a student checking account

Your brand-new university ID makes you eligible for student checking accounts. This gives you a good home for your money while you're in school, and helps you develop good banking habits.

Student checking accounts often have low or no minimum opening deposits, and they also generally do not require you to carry a minimum balance each month. In addition, some student accounts offer perks like a limited number of free out-of-network ATM transactions per month, free checks, and some overdraft forgiveness.

2. Start automating your bills

Once you have a checking account in place, you can take advantage of your bank's online bill paying services to set up automatic payments of your regular expenses. Automatic bill payment allows you to keep your focus on your studies, where it belongs.

Of course, the caveat is that you need to periodically make sure your account has enough money to cover your automatically paid bills. One good way to do this is to set up a weekly reminder to check your finances. This will help you establish the habit of keeping an eye on your finances even as they are taken care of automatically.

3. Create a spending plan for your financial aid

Receiving a big chunk of money from your university's financial aid office can be pretty exciting — whether you're receiving loans you'll have to pay back, or grants that you won't. It's tempting to live it up when you receive your financial aid, but that's a good way to run out of money before the semester is over.

Instead, take the time to create a spending plan for your financial aid disbursement before the money hits your bank account. Determine how much of your financial aid will need to go toward tuition, textbooks, lab fees, and living expenses. Having such a plan in place will help you keep your spending in check when you feel the urge to splurge some of your aid money.

5. Keep track of your student loans

Many college students — including yours truly! — make the mistake of paying no attention to their student loans until they have graduated. In general, the amount of money you are borrowing can seem unreal, so it's very easy to just ignore the problem until you reach your student loan exit interview just before graduation.

However, knowing early how much you owe and how much it will cost you to pay it off is both good for your financial health and can help you remain motivated in your studies. It's much easier to get up for that 8 a.m. chemistry lab when you understand just how much you're paying for the privilege of going to it.

If you have federal student loans, you can keep track of how much you have borrowed and what your repayment options will be through the National Student Loan Data System. Just select "Financial Aid Review," log in, and you can view all of your federal student loans in one place. If you have any private student loans, you will need to contact your lender for information regarding your loans.

6. Build up an emergency fund

When I was in college, a classmate's financial aid package was re-evaluated at the end of her first year. The school's financial aid office decided that she could count on an additional $1,500 from her family for her second year, even though she knew that it would be impossible to ask for that additional money. By working some serious overtime that summer and living off tuna fish and ramen, my classmate was able to scrape together the additional money. But this situation could have potentially meant the difference between her returning to school and her dropping out.

An emergency fund can make this kind of unanticipated financial change much less stressful than it was for my classmate, especially when you are already living on a shoestring.

Building an emergency fund might feel impossible when you're in college, but don't forget that small amounts can add up to something really helpful. Start with an automatic transfer of $5 —$10 per week into a savings account. Add in whatever excess money you come across — including the cash you get for selling back textbooks or some of the birthday money Nana sends every year.

Though your fund will grow slowly, working steadily on it will ensure that a financial aid (or other emergency) does not jeopardize your education.

7. Learn from your financial fumbles

Every time you make a financial decision as a college student, you have the opportunity to learn from your choices. The trick to learning from financial mistakes rather than repeating them, is to look back on the choices you made with curiosity and compassion for yourself. You're a college student, after all, and learning is the entire job description.

Take each moment of money regret as an opportunity to figure out where your financial weaknesses are. You'll finish college with a much better understand of yourself and your money temptations, as well as potential solutions for avoiding those temptations.

Learn about finances before you enter the real world

It may feel like adding financial responsibility on top of your educational requirements will be too much to handle, but college is actually a great time to work on your money management skills. Taking good care of your finances as you are engaging in higher learning sets you up for financial success after graduation.

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This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

9 Surprising Perks (and Some Drawbacks) of Paperless Billing

Emily Guy Birken — Mon, 06 Mar 2017 11:00:09 +0000

Back in 2001, paperless billing was still in its infancy, and I was a recent college graduate who was just getting started in the adult world. At the time, my car insurance provider offered me a discount if I signed up for online billing. The discount helped me overcome my reluctance to give up my paper statements and beloved check writing routine.

The world of paperless billing has evolved a great deal since the first year of the new Millennium. Here are the pros and cons of using paperless billing today, and some suggestions for making sure the benefits always outweigh the costs.

1. Pro: Paperless Billing Is Better for the Environment

Switching from paper to online statements doesn't just save stamps, it's also an important way to help the environment. According to PayItGreen studies from 2010, if just 20% of American households switched from all-paper to all-digital billing, statements, and payments, the collective impact would be enormous. Such changes would include:

Save 150,939,615 pounds of paper
Save 1,811,275 trees
Avoid producing almost two million tons of greenhouse gases
Avoid creating more than a billion gallons of wastewater in the paper production process
Avoid using over 100 million gallons of gas to mail payments

2. Pro: Companies Will Offer Incentives to Go Paperless

Since companies spend less on paper, stamps, and sorting when they do all billing and payment online, it can make a big difference in their bottom line to get as many customers on paperless billing as possible. They often will sweeten the suggestion to go paperless by offering customers some sort of incentive to switch over. In some cases, like my auto insurer back in 2001, you can expect a small discount. Other incentives might include a statement credit, a gift card, or even the opportunity to win a prize.

3. Pro: Paperless Billing Helps You Declutter

Paper clutter often seems to have a life of its own. Switching to paperless billing means you'll never misplace a bill in a pile of junk mail, nor will you ever accidentally shred or recycle an unpaid bill because it decided to hide in the pile of credit card solicitations on your desk.

4. Pro: You'll Be Better Protected From Identity Theft

It may offer the illusion of security to hold a paper bill in your hand, but that's not always the case. It's a piece of cake for mail thieves and dumpster divers to glean sensitive account information off a stolen bill they pinched from your mailbox or garbage. By the time you realize your identity has been compromised, you may have a real headache to deal with, and some financial damage to undo.

Your emailed paperless statements will never show your full credit card or bank account information. Even if a scammer hacks their way into your inbox, they'd still have to hack their way into your bill provider's online account to access sensitive information. Prevent this by using a strong password that includes multiple characters as well as upper and lowercase letters.

5. Pro: Access Your Statements From Anywhere

If you receive a paperless bill, it doesn't matter where you are — if you have access to the Internet, you have access to your statement. If you're out of town for work or vacation, you won't have to worry about what vulnerable information is left sitting in the mailbox while you're away.

6. Con: Forgetting to Pay a Paperless Bill

When you ignore your snail mail, it tends to pile up, making it harder to forget that there may be something important in there. Email, on the other hand, is eminently easy to ignore — so your paperless utility bill can very easily go unnoticed.

Similarly, even if you do stay on top of both your paper mail and email, you may not be ready to pay your bill the moment it arrives. If that's the case with a paper statement, you can always set the bill somewhere that you'll see it, to remind yourself to pay it at another time. It is much more difficult to flag your email to remind you to pay the bill, which means you may forget until after you've missed the due date.

The Fix: A Dedicated Email Account and Calendar Reminders

Create a dedicated email account just for all of your bills, and plan on checking this email regularly. In addition, create reminders in your calendar to prompt you to check your dedicated email account so you never miss a payment.

7. Con: Lost Passwords

Passwords are an important part of online security, but the fact that pretty much everything you do online must be password-protected means that the odds are stacked against you for remembering all of your passwords. Many people get around that problem by using the same password for everything — which can seriously compromise your security if any of the accounts you use gets hacked.

Companies that offer paperless billing often require even more security from your password, such as needing a special character, a number, and a capital letter. This is understandable, but it makes it even more difficult for the average person to remember their password — and multiple incorrect guesses can sometimes get you locked out of the site.

The Fix: Create a Password Based on a Sentence

The secret to secure but memorable passwords is to start with a sentence that means something to you. For instance: "I am waiting for the reincarnation of Elvis."

Then substitute letters, numbers, and symbols for each of the words: I@w4troE

With that as your base password, you could tailor it to each site so that you can still remember your passwords, but each site's password is slightly different. For instance, you might add letters and numbers that represent the site to the end of your base password.

For Capital One 360, your password would become: I@w4troECO360

Just jot down the original sentence somewhere you can find it. It will remind you of your password, and mean nothing to anyone else.

8. Con: Forgetting to Update Account Information

If you moved, you'd have to let your bill providers know and inform them of your new home address. Well, the same is true for your email when you receive paperless statements.

Maybe you're about to lose access to a work or school email that was tied to your billing account, or you're about to shut down an old email that got swamped by hackers. If you forget to update this change in your online billing account settings, you could end up losing access altogether.

9. Con: Overdrafts From Automatic Payments

Many people who set up paperless billing also make the leap to automatic online payments. For anyone whose income is variable, or anyone who lives paycheck to paycheck, automatic bill payments can cause major headaches if you have insufficient funds in your account on the day that your payment is debited. This makes for something of a Catch-22, since many people in such a situation need the discount that an automatic payment provides, but the automation puts them in danger of overdraft every month.

The Fix: Ask for a Change of Payment Date

Most companies will allow their customers to request a specific payment date, particularly if they are using auto-pay options. If you deal with variable income or have trouble making it from one paycheck to the next, set up your automatic payments so that they are debited on the day your paycheck clears. If you have multiple bills that are auto-debited, you can stagger them through the month to coincide with your paydays.

Making Paperless Billing Work for You

Digital billing is here to stay, but it's far from a perfect system. Knowing which of the downsides are most likely to trip you up will allow you to plan ahead for the problems while you enjoy the benefits.

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This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Simple Ways to Never Make a Late Credit Card Payment

Holly Johnson — Tue, 28 Feb 2017 10:31:29 +0000

If you've ever paid your credit card bill late, you've likely endured both hassle and expense. Not only are you charged $27–$37 for each late payment, but your credit score could take a hit, too. If your payment is behind by 60 days or more, your penalty APR might also kick in — causing your interest charges to skyrocket overnight.

One way to avoid this mess is to shun credit completely and use debit or cash instead. The downside here is credit cards provide protections and conveniences debit cards can't. Plus, you'll miss out on the myriad perks only credit cards offer, such as purchase protection, price matching, rental car insurance, and extended warranty programs.

The better solution for most people is to find a way to pay all credit card bills early or on time. That way you can leverage credit for the perks and rewards without ever having to worry about fees, surging interest rates, or credit score dips.

Often, this is a matter of getting organized and making payments automatic. Check out these five ways to foolproof your finances so you'll never pay late again.

1. Set Up Auto-Pay

If you're worried you'll forget your payment due date altogether, setting up automatic payments is smart. Most credit card issuers offer this payment option, but you can also set up auto-pay through your bank. When you sign up with your card issuer, you'll get to decide when and how much you want to pay. For example, you can choose to have your checking account automatically debited on your due date, or on some day before then. You can also opt to pay the full bill amount, a fixed dollar amount, or only the minimum payment.

Obviously, this strategy comes with huge advantages. Since your bill is paid automatically, you don't have to worry about remembering to pay it. That means you should never be charged a late fee or have a late payment show up on your credit report. Even if you set up the system to pay only the minimum payment, you can always log into your account and pay your full bill later.

On the flip side, paying your credit card bill automatically does come with drawbacks. If you have a history of overdrafts on your bank account, for example, setting up automatic payments may be hazardous to your finances. For automatic payments to work, you need to have the money in the bank to cover your payments every time they're deducted from your bank account. Otherwise, you'll be hit with a fee from the bank for insufficient funds, a late fee from your credit card, and possibly an additional fee for a payment not going through from your credit card as well.

Setting up auto-pay may also be a bad idea if it lulls you into not looking at your bill every month. Not only can you miss fraudulent charges on your account, but if you're struggling with debt, the last thing you need to do is avoid seeing your bill every month. If you set your account so the minimum payment is paid automatically, you may not even realize if your situation gets worse.

2. Pay Your Credit Card Bill Multiple Times Per Month

If you're fairly good at remembering your credit card bill but lax when it comes to your actual due date, paying your card off several times per month might be the answer. For some people, it's easier to get into the habit of paying their bill once a week, or whenever they think about it, rather than waiting for one due date at the end of the credit card billing period.

The convenience of the Internet and mobile bill pay has made it possible to pay your bill at any time and any place of your choosing. By paying your balance every time you get the chance — and whether it's due or not — you can avoid late payments altogether. And since you're constantly aware of your growing balance this way, you might be more inclined to stay on budget as well.

The downside to paying your bill several times per month comes when you get busy and forget. If you can't remember to pay your bill on your due date but still want to pay multiple times per month, it might be wise to set your account to pay your minimum payment automatically as a stopgap measure. Then, you can log into your account and pay your full bill each time you get the chance.

3. Change Your Due Date

If you have several bills and each has a random due date, it can be hard to stay organized and keep each bill on track. Fortunately, most credit card issuers will move your due date to any date of your choosing. Most of the time, all you have to do is ask.

This strategy can come in handy if you have another major bill you can't afford to forget. If your rent payment or mortgage is due on the 4th of the month, for example, you could move your credit card bill to the same date and pay them simultaneously.

The benefit of moving your due date is you're more likely to remember to pay if the due date coincides with other important bills. The downside, however, is that you will have to have funds to cover several payments at the same time. If you're living paycheck to paycheck, it may be hard to cover a large sum at one time.

4. Try Debitize

Debitize is a free service that helps consumers enjoy the benefits of credit without risking late payments or debt. It works by linking your checking account with your credit card accounts, and then automatically setting aside funds as you make purchases with credit.

Once your accounts are linked and Debitize starts deducting amounts equal to your credit purchases from your bank, your credit card works more like a debit card. The fact that Debitize "turns credit into debt" in this fashion makes it immensely helpful for anyone who wants to avoid late payments and stay out of debt.

Debitize also offers additional protections that can help consumers avoid an overdraft. For starters, you can set a minimum balance on your checking account so you always have enough money left to get by. Second, Debitize lets you set up custom notifications so you're alerted when you reach a certain spending threshold or if unusual activity is reported. Lastly, Debitize pays your bill automatically for you, leaving zero room for error on your part.

The notable downside to using Debitize is the fact that you're surrendering some control. You may not like having a third party deduct money and pay bills on your behalf. If that's the case, you might be better off using one of the other recommendations on this list.

5. Sign Up for Payment Alerts

If you're afraid you'll forget about your credit card bill and need a reminder, consider setting up some automatic nudges. Through your bank — or through a service like Mint.com — you can get automatic payment alerts on certain dates of the month or when your payment is almost due.

This strategy can be truly beneficial for someone who is financially responsible yet prone to forgetting their bills. Once they receive their automatic reminder via text or email, they can log into their account and pay their bill right away.

Obviously, setting up payment alerts can only take you so far. If you're someone who forgets easily, even setting up a reminder may not be enough to help you foolproof your credit card bills. After all, you still have to physically log into your account and pay your bill yourself.

In that case, you may be better off setting your bank account to pay your minimum monthly payment automatically as well. That way, you're covered even if you forget.

This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Secrets to Mastering the Debt Snowball

Dan Rafter — Tue, 31 Jan 2017 10:00:08 +0000

You probably already know it makes more financial sense to pay off debts with the highest interest rates first, a payment method known as the debt avalanche.

But here's a surprise: A study published last year in the Journal of Consumer Research found that people were more likely to actually pay off their debts if they relied on the debt snowball method, instead. In this approach, you pay off your smallest debt first, followed by your next smallest, and so on — until you've paid off all of them. You take this approach without worrying about which debts have the highest interest rates.

Why does this method seem to work better? Researchers say it's about that all-important feeling of accomplishment. You'll get a rush of good feelings when you pay off a credit card, even if the debt on that card isn't that high. Yes, you'll pay more in the long run by not targeting debt with the highest interest rates first. But if the snowball method works better, and if you've long struggled with your credit card and other debts, you might be better off taking this approach.

So, if you're ready to give the debt snowball method a chance, here are some tricks to boost your chances of success.

1. Draft a Household Budget

Creating a budget doesn't sound like fun, but it's critical if you're ready to get serious about paying down your debt. Your household budget should include the money that flows into your home each month and the money you spend, including estimates for such discretionary expenses as eating out and entertainment.

Once you have a budget, you'll better know how much money you can allocate to paying down that smallest debt each month. Without a budget? You might be paying too much, putting yourself at financial risk. Or you might pay too little, dragging out the process of paying down your debts.

2. Don't Use the Card You're Trying to Pay Off

It might sound obvious, but don't add to the debt you're trying to pay off first. Don't use your credit cards to pay for anything. Follow your budget and pay cash or check for your allocated expenses. If you have a balance already on the card from the previous month, using it will immediately start interest charges on that amount. Nothing stalls your debt elimination process more than adding additional interest.

3. In Fact, Don't Purchase Anything You Can't Afford to Pay Off

You're going to have to get used to a different sort of lifestyle, and that means no longer buying things you can't pay off at the end of the month.

4. Automate It

When you're concentrating on paying off one debt quickly, it can be easy to overlook some of your other bills. You can avoid this, though, by turning to automated bill payment. If you find yourself overlooking your cellphone bill, create an automatic payment from your bank account to cover that bill each month. You can do the same thing with car payments, student loan payments, or utility bills. Do this, and you'll dramatically reduce the odds of paying one bill late while you're whittling down another.

5. Don't Waste Bonuses or Promotions

Are you in line for a bonus at work? Don't blow that money on a new laptop. Instead, funnel it toward the debt you are trying to pay off. There's no better feeling than lopping off a huge chunk of debt.

Or, maybe you've earned a promotion and a nice pay raise. Don't think that this gives you more spending money each month. No — until you pay off your debts, spending extra on fun shouldn't be a consideration. Instead, take the extra money you earn each month and use it to pay down your debt even faster. And then when you eliminate a student loan, credit card bill, or car loan, keep using that extra money to help pay down your next largest debt.

6. Consider a Balance Transfer Carefully

This strategy is only for those who are diligent and committed to paying off a certain amount of debt within a specific period of time. Credit cards offer new cardholders various balance transfer offers. Some have longer promotional periods (18-21 months), while others will waive the balance transfer fee (usually 3%-5%). Using a balance transfer to pay down credit card debt can save you a lot of money in interest. However, if instead you misuse this opportunity, by not paying off the debt during the 0% promotional period, and continuing to rack up debt on the cards you transferred balances from, you will find yourself in a crisis dealing with more accumulated debt than you started with, and at an even higher APR. (See also: 7 Important Things You Should Know About Balance Transfers)

Paying down debt is never easy. But if you remain committed, and you need a series of smaller, but quicker, victories, the debt snowball method can work. Just make sure to remain focused on that goal of eliminating each debt one at a time.

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Switch to a Better Bank in 5 Easy Steps

Dan Rafter — Fri, 04 Nov 2016 10:00:06 +0000

Switching banks is a pain. You have to close accounts, research new banks, and rework all those automatic bill payments you've set up at the financial institution you'd like to leave.

But sometimes making the switch is the right move. Maybe your bank has raised its fees. Maybe it's closed the branches that operated near your home or work. And if you're moving, you might have no choice but to make the switch.

Yes, switching banks does take a bit of work. But it's relatively simple work.

If you need or want to switch to a new bank, follow this simple step-by-step guide. Doing so will ease any stress from jumping to a new financial institution.

1. Research a New Bank

Before closing any accounts at your current bank, make sure that you spend some time researching a new home for your money. Choose a bank that offers online bill pay and direct deposit, of course. You also want one that offers free checking and higher interest rates on savings accounts — relatively speaking, since interest rates are still near historic lows.

Customer service matters, too. Search for a bank that has plenty of ATMs near you and that still operates branches within a short drive of your home or office. You might also consider investigating a credit union or an online bank, both solid alternatives to traditional banks.

The key in this search is the checking account. Make sure you know exactly how your new checking account will operate. Is there a minimum-balance requirement? Are there fees if you make too many withdrawals during a month? How large of an initial deposit do you need to set up your new account? These are all key questions that you should answer during your research.

2. Open Your New Checking Account

Once you select a new bank, start the switching process by opening a checking account there. Do this before you close the checking account at the bank you are leaving. You might still need money in your old account to cover payments that haven't yet cleared.

To open a checking account, you'll need some basic information. You'll need to provide, of course, your name, address, and date of birth. But you'll also need to provide your Social Security number and one official piece of photo identification. Usually, this will be your driver's license. But banks will also accept an official state ID card or your passport.

Your bank will then require you to make an initial deposit into your new account. How big this deposit must be will vary by bank.

3. Cancel Automatic Payments at the Bank You Are Leaving

Once you've established a checking account at your new bank, it's time to cancel any automatic payments that you've set up at the bank you are leaving. Do this right away, so that your creditors don't try to take money out of an account that is either empty or has been officially closed.

Then set up the same automatic payments with your new bank. You'll need your bank's routing number and address and your checking account number to do this.

If you had signed up to have your paycheck deposited directly into your old account, cancel that direct-deposit arrangement, too. Then contact your company's human resources department to move your direct deposits to your new checking account.

4. Close Your Old Account — When the Time Is Right

You can now close your old account, if all of the checks you've written against it have cleared. Compare your check register against your online account to make sure.

If you don't do this? Any checks that have not yet cleared will bounce if your old account is closed. The companies that you were paying might charge you late fees if this happens. This danger is why it usually makes sense to wait at least a month after opening your new checking account before closing your old one.

5. Get It in Writing

When you're sure that all your checks and payments have cleared, you can officially close that old account. Doing this in person might be the best choice. That way you can instantly receive written verification that your account has been closed. You'll want this documentation in case your former bank reopens your account or claims that it was never shut down in the first place.

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This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Simple Financial Upgrades You Can Make During Breakfast

Emily Guy Birken — Wed, 07 Sep 2016 09:00:09 +0000

One of the biggest misconceptions about money management is the idea that it needs to be time-consuming. But many of the financial moves that help you keep a healthy budget take less time than the average coffee break.

Over the next six days, take care of one of the following money management chores while you’re enjoying your morning latte. While you’re eating breakfast each day, you can improve your financial well-being without spending more than 10 minutes at a time:

1. Set Up an Automatic Transfer to Savings

Everyone knows that they should have an emergency fund, but finding money to set aside at the end of every month is so tough. This is why so many personal finance experts recommend creating an automatic transfer from checking to savings on payday. If you save your money before you have a chance to spend it, then it will actually be there for you in an emergency.

While you are eating your morning Wheaties, log onto your bank’s website and set up your automatic recurring transfer online. Even if all you can afford to spare is $20 per paycheck, those recurring transfers will add up. In a few months, you can log back on to increase your savings.

2. Kill Your Zombie Charges

Zombie charges are the fancifully-named recurring subscription charges that you no longer want. There is absolutely no reason to keep sending money to Spotify or your gym if you never use those services.

Identifying your zombie charges can be easier than eliminating them (just like real zombies!), but you can take time over breakfast to review your credit card and bank account to find recurring charges for services you no longer use. In some cases, canceling the service is quick and easy, and can be done before you clear the breakfast dishes. For anything that requires more than a visit to a website to cancel, set yourself a Google calendar alert to take care of the cancellation sometime in the next few days.

3. Check Your Credit Report

You are legally allowed free access to a credit report from each of the major credit reporting agencies — TransUnion, Experian, and Equifax — once a year. Log onto annualcreditreport.com to access your credit information. Getting your report will take just a few moments — you just need to fill out one form to request up to three credit reports (one from each agency), pick which agency’s report you want to check out, and verify your identity to receive your credit report.

You can print out your reports while polishing off your toast, but you might need to take a little time to go over the reports in detail to make sure there are no errors.

4. Set Up Reminders for Upcoming Bills

Whether you are still paying bills the old-fashioned way with paper checks or you pay all your bills online, due dates can have a way of sneaking up on you. While you’re waiting for the coffee to brew, take a few moments to look up the due dates of bills over the next several months and set up Google calendar alerts to remind you when they are coming.

Even if you have completely automated your bill-paying, it can be a great idea to set up bill reminders so you take the time to look over your monthly bills and make sure you have enough money in your account to cover them all.

5. Adjust Your Withholding

The average American receives a tax refund of over $3,000 every year, which amounts to an interest-free loan to Uncle Sam. You can do more with that money if you adjust your withholding so that you keep more of your money in each paycheck.

To do this, first use the IRS withholding calculator to determine how many withholding allowances you may take. Remember that the withholding allowances you claim do not determine your tax bill, only how much you pay in taxes per paycheck, so your answers on the calculator can be approximate.

Once you have figured out your allowances, request and fill out a W-4 form from your employer’s HR department.

Granted, this particular money move cannot be completed over breakfast at home, but you can certainly enjoy a conference room bagel in the time it takes you to recalculate your withholding and email HR to request a new W-4 form.

6. Change Your Financial Passwords

It seems as if a major corporation is hacked once every couple of months, which means customer information is vulnerable. You can protect yourself by changing up your passwords on your bank and other financial websites every six months.

An easy way to do this without making yourself crazy is to start with a sentence that means something to you:

I am waiting for the reincarnation of Elvis.

Then substitute letters, numbers, and symbols for each of the words:

I@w4troE

With that as your base password, you could tailor it to each site so that you can still remember your passwords but each site’s password is slightly different. For instance, you might add letters and numbers that represent the site to the end of your base password. For Capital One 360, your password would become:

I@w4troECO360

Just jot down the original sentence somewhere you can find it. It will remind you of your password, and mean nothing to anyone else.

Breakfast, With a Side of Money Management

Taking care of your money does not have to take you all day. These six money moves can be accomplished over breakfast and will start your day off right.

What do you do while waiting for the coffee to brew?

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This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Set Up Automatic Payments

Debbie Dragon — Tue, 15 Nov 2011 10:36:34 +0000

Using automatic payments allows you to pay your bills on auto-pilot. You don't have to sit down and write out checks to mail to your creditors each month, and you don't even have to log into your various online accounts to pay your bills online, either. When set up correctly, automatic payments will simply pay your bills at the frequency you indicate, with no further action required on your part. (See also: 6 Tips to Shrink Your Bills Every Year)

There are two basic methods for setting up automatic payments: through your own bank or through each individual creditor's website. Here is what you need to know.

Automatic Payment Options Through a Bank's Online Bill Pay

Most every bank offers online bill pay. This allows account holders to send money from their checking or savings accounts to whoever they want, at whatever frequency they want. Some banks physically print checks and mail them to your creditors, while others will transfer money electronically.

You can set up your automatic payments by logging in to your bank's bill pay website, setting up a new payee, and entering the account number of the creditor or utility you want to pay in the appropriate fields. Most banks allow you to set up recurring payment frequencies — which means you can schedule your credit card payments, for example, to send each month before they're due and not have to worry about sending the payment on time. Some banks will not allow you to create recurring payments, in which case you will still need to sit down at the computer every time you need to make a payment.

The benefit of using a bank's online bill pay service over individual creditors' websites is that you can log in to one account and view all your scheduled payments in one place rather than logging in to multiple accounts.

If your current bank does not have automatic payments or doesn't allow you to set up recurring payments, then you can use a service like MyBankTracker.com to compare banks and find checking and savings accounts that do offer online bill pay services.

Automatic Payment Options Through Your Creditors' Websites

The other option you have for setting up automatic payments is through each of your creditor's and utility account's websites. Most credit card companies and utilities have online account management systems that allow account holders to log in and schedule payments. Many also offer options for setting up recurring payments — for example, you can set up most credit card accounts to pull money from your bank account each week, biweekly, or monthly.

Many utility companies allow you to set up automatic payments that will pull your payment from your bank account when it's due without any further action from you to make sure it gets paid on time.

Automatic Payment Pitfalls to Watch Out For

With all of the benefits offered through automatic payments, there are some pitfalls and potential problems to watch out for. The biggest pitfall people sometimes experience with automatic payments is a little mistake that can add up to hundreds of dollars. Let's say you set all of your accounts to get paid automatically, but then have an unexpected change in your income. If your income fluctuates, or a paycheck isn't deposited on time for any reason, you may find yourself with a bank account balance that isn't high enough to cover all of your automatic payments. This results in overdrafts that can quickly add up. If you had not been using automatic payments, a change in your income or delayed deposit isn't as big of a deal, since you could just hold off making your bill payment until the deposit clears.

If you are using your bank's online bill pay feature, make sure you know whether or not there is a fee for this service. Some banks offer online bill pay through savings accounts or checking accounts for free, while others charge a monthly service fee for access. Most online banks offer online bill payment for free.

When you use an individual creditor's website for automatic payments, sometimes there is a limit to how many payments will be made automatically before you need to log back into your account and schedule more. Thus, you might set everything up to make your payments on time and then realize three months later your automatic payments have stopped. Since you had been expecting your payments to get sent automatically, there's a good chance everything will be late before you realize the automatic payments ceased. Double check each of your creditor's and utilities' websites for details on the frequency of payments, and if you have accounts that only allow you to schedule a limited amount of payments at a time before you need to set it up again, make sure you mark it on your calendar or set an alert on your phone so you remember to log in and set it up again.

This article is from Debbie Dragon of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: