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Common mistakes to avoid on your current account

Common mistakes to avoid on your current account

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Most of us think about our current account in only one way: Is there enough money in it? While that’s certainly the most important piece of the puzzle, there are plenty of other things to consider to ensure that you’re getting all the bangs for your bucks.

According to, you need to beware of the following common, costly mistakes bank customers make with their current account.

  1. Maintaining a lower balance than you need to cover your expenses

Your top concern regarding your current account should always be that you have enough money in there to cover your expenses — even more so if you subscribe to direct deposit and/or autopay services. By engaging in the latter, you’re essentially putting machines in charge of your finances, which, while convenient, are not always accurate. If you don’t have enough money to cover your bills, you know what happens — you dip into the negative and you’re slapped with insufficient funds or overdraft charges, further dragging you into the red. This oversight also can affect your credit score if you miss the payment for 30 days or more.

The best you can do for yourself is to commit to keeping your bills covered by your current account and staying on top of your auto-deposit payments to maintain a positive and accurate balance.

  1. Keeping more money than you need in your current account

Keeping enough money in your current account to cover your expenses should be your main focus, but you also may be doing yourself a disservice by keeping too much money in that account. It is a balancing act, for sure — but if your surplus can benefit you someplace other than your current account, you need to move it.

The Founder of a personal finance blog, The Fortunate Investor, Michael Banks, says, “Money that sits in a current account accumulates very little in interest. [Some banks], however, offer investor current accounts that allow you to invest your current account funds to maximise growth. You don’t need to invest all of your money, and it’s easy to keep two accounts and transfer as much into your investing account as you feel comfortable with; but the more you invest the more you stand to gain in the long run.”

  1. Limiting your access to in-network ATMs

If you’re banking someplace and the ATM locations are prohibitive to you, consider banking elsewhere; you could save a bundle in time and fees.

  1. Paying fees just to have a current account at a particular institution

Some banks charge a monthly current account fee if you don’t keep a minimum balance in it — N10,000, for example. If you don’t like keeping excess funds in your current account, it does not make sense to pay a premium to bank with an institution that charges you for moving money around.

  1. Spending without checking your balance

Do you know exactly how much money is in your current account right now? What about a close estimate? If the answer is no, you’re not staying on top of your money well enough — and you definitely shouldn’t be pulling out your debit card when your balance is in flux. Before you make a purchase that you even think could compromise your balance, log into your account (easy to do with your mobile app), and manage your money wisely.

  1. Ignoring your transaction history

You need to stay on top of what payments are being deducted from your current account, even if they haven’t actually been deducted yet. Continuing to spend when payments are pending could spell disaster.

“Check your account every couple of days to ensure transactions have been posted,” according to Rachel Smith, a personal finance expert at TopCashback.

“Be aware of holds on your account as a result of a retailer or merchant requesting authorisation of a purchase. For example, fuel stations and hotels could put a hold on your account until the actual transaction clears, so be mindful of these transactions when viewing your available funds. I also recommend checking on your transactions for fraudulent charges and reporting them as soon as possible.”

  1. Not subscribing to overdraft protection

Banks typically charge overdraft fees, and it’s important to keep that in mind when you know your current account is getting low. You also should fortify your account with overdraft protection if it makes sense for you.

“Although opting out of overdraft protection can be ideal to not get hit with overdraft fees on debit card purchases, your bank can still charge you non-sufficient funds fee for cheques and bill payments that can be comparable to an overdraft fee,” Smith explains.

“It is ideal to opt out of overdraft protection when you have a savings account with the same bank. Typically, if you have both, the overdraft fee is less. If you choose to opt in to overdraft protection, always be cautious so you avoid the charge.”

  1. Assuming that every debit charge is legitimate

Once a week you need to go through your current accounts to make sure all the debit charges are legitimate. There have been a few occasions where customers have noticed an error — a fraudulent charge, a subscription they canceled, an incorrect amount charged for an expense that they authorised, or a price hike in their existing memberships. If they didn’t do their due diligence and address these errors, nobody else would have. Check in on your money to make sure the numbers are correct.

  1. Linking to online retailers you know nothing about

It’s becoming more and more common — especially around the holidays — for shoppers’ financial information to be compromised by a security breach. Nobody will tell you to stop shopping online altogether, because that’s just impractical, but it is important to know that you need to be more responsible in where you spend your money and save your banking information.

First, make sure the website is secure. The “https://” distinction designates a secure site, opposed to the more common “http://” protocol identifier for sites that don’t require any user information.

Second, use common sense. While it’s not impossible for well-known retailers with an arsenal of security resources to get hacked, it’s much more likely to happen to the small-potatoes shops that can’t afford top notch security. Of course, these smaller retailers don’t have as much to offer hackers in the way of identity theft. But in any case, use your best judgment when providing your financial info online to prevent being a victim.

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