The first banks did something fairly novel and simple: they provided loans. If you were a startup merchant and you wanted to make your fortune, you would go to a lending house for the money to supply your ships with the provisions needed to get to Africa, Italy or India. Of course, you would have to put up something for collateral—your estate and land holdings. In the event you failed on your trading voyage, defaulting on your loans, your assets would become the bank’s. This was the humble start of today’s sophisticated banking practices, such as loan modification and refinancing.
Don’t pay for accounts and transactions
Banks make money holding your cash. They lend it out at interest and use it to fund bigger ventures. Many banks will also charge you fees for using your card internationally. They also charge merchant fees every time you use that logoed bankcard at a restaurant or retailer.
In cases where the banking practice is long established, it is up to you to be sure to use your bankcard responsibly. Using your ATM card at another bank can cost you an arm in a leg in checking fees. For instance, if you aren’t a customer, Bank of America usually charges $3.00 per transaction. This is huge profit for them, and adds up for you. Many banks offer free checking so long as you go ‘paperless.’ This saves them money, too.
Use computerized alerts to help manage your money
Opt out of expensive overdraft protection options and setup your bank to alert you if you exceed a certain low-balance threshold. These computerized alert systems can give you the details of when checks are cashed or if they detect spending consistent with fraud. This is one of the truly helpful features of the smartphone age.