Cash Strapped? Get Your Bank to Pay You

With the economy feeling like it is on pins and needles thanks to exorbitant prices at the pump and rising costs at the grocery store, every penny can start to add up.

So, let's take a closer look at the very place that holds all your pennies -- the bank -- to give you some advice on how to ensure that you are saving your money at the bank as opposed to spending it there.

Let's start with the very basics. What should you know about your bank?

First and foremost, banks are the bedrock of the American financial system. Since the Federal Deposit Insurance Corporation, more commonly known as the FDIC, was established 75 years ago, no consumers have ever lost a penny of their deposit at an FDIC-insured institution.

ATM fees and Online Banking
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That is an incredible track record. The basic FDIC coverage insures $100,000 per depositor per bank and up to $250,000 for some retirement accounts. So it is safe to say, if your money is in one of 8,494 FDIC-Insured banks, it is in safe keeping.

You say a major misnomer that consumers should be aware of is "free checking." Why?

Free checking is one of the most commonly misunderstood banking concepts. Only about one-fourth of all banks offer free checking. And, while your account may be "free," it does not mean that you will not be hit with other fees if your account level dips below a certain balance, if you stop a payment on a check, need extra check copies or, in some cases, check your balance at an ATM.

The one figure that is eye-popping, according to a survey conducted by Bankrate.com, is the average balance required in order to avoid a monthly service fee in an interest-bearing checking account is almost $3,320. If your balance dips below that amount, the average monthly fee is $11.72.

The good news: There is a lot of competition for your money so you have many, many options for checking accounts. My advice -- shop around and ask your bank for a copy of your account fees. All banks have this information and are required to disclose it to you.

Also, a great source to research checking accounts is Bankrate.com. The site is very easy to navigate and contains a wealth of information including a comparison of available interest rates.

Although your money may be protected, how do you make sure it is growing?

The general rule of thumb is that you should have three to six months worth of living expenses in the bank available at all times in case of an emergency. I know this is not easy, especially given today's tough economy, but this is extraordinarily important, especially because you want to avoid at all costs tapping into your 401k or retirement savings if a financial emergency arises.

Money for your everyday living expenses should be kept in your checking account, but your savings should be kept in a separate account so that you are not tempted to dip into it. In terms of emergency savings, you want to put your money in a safe, liquid and easily accessible investment vehicle. Two good options include:

Savings account: A savings account offers the same benefits of a checking account as the money is guaranteed by the FDIC; however, it too can be tapped into with a simple trip to the ATM. While access to your emergency fund is critical, it should stay out of sight and out of mind.

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