In tough economic climates, when consumers face obstacles from record high interest rates to rising costs of living—especially for rural Americans—it's more important than ever to ensure that the financial choices we make don’t set us up for unnecessary hardship. There are many good habits that are easy to do, like automatically saving part of your paycheck or monitoring your accounts for fraud, that can have big payoffs or help you avoid major setbacks. But the reverse is also true; shortcuts in financial planning or management can hold you back from reaching your goals—whether they are saving for retirement or just obtaining financial stability, day-to-day.
In this post we’ll cover five common mistakes individuals make that can have an impact on their financial wellbeing. Keep reading to learn more about these financial habits and see how making small changes can yield big results.
1: Not Knowing Your Credit Card Interest Rate
As the cost of goods and services rise, more Americans are currently relying on credit. In fact, nearly half of US cardholders carry a balance from month to month. According to the Consumer Finance Protection Bureau, Americans pay $120 billion each year on fees and interest alone. With APRs cresting at over 20% in the fourth quarter of 2022 (up 4% in the last four years), the amount individuals pay on these balances will only continue to increase.
Keep your credit card balance to an amount you can pay off each month, use your checking account debit card for purchases (cutting back on spending to stick to your budget), save for larger items and emergency expenses in a designated savings account, and utilize lower-interest personal loans for larger, necessary expenses.
It’s important to be aware of the interest rate of your credit card accounts, especially in comparison to other loan products. When you not only know your rate, but also know how compounding interest can accelerate your existing credit card debt, you may be less inclined to pull out the credit card for both everyday and large purchases.
Credit cards are useful financial tools, and a great way to build good credit if used properly. Getting a credit card from your bank, where you use automatic payments from your checking account to pay off your full balance each month, and on time, can help you build credit in a responsible and manageable way. Additionally, opting for a credit card that has online account monitoring will give you the opportunity to keep an eye on your balance and interest rate. At Peoples Bank, our Personal Credit Cards offer free Bill Pay and Online and Mobile Banking. We offer mycardstatement.com website, not incorporated with our online banking if this could be worded different.
2: Not Setting Up an Automatic Savings Account Transfer
If you are, like 64% of Americans, living paycheck-to-paycheck, it might seem unimaginable to automatically set aside a certain amount of money for savings. However, every little bit counts. Saving $25 a week will give you a nest egg of $6,500 in just five years’ time—and that’s before you incorporate earned interest. Establishing a habit of ‘paying yourself first’ by setting up regular payments to your savings account can help you save for specific goals, as well as unexpected expenses—especially when using interest-bearing accounts—grow your wealth.
If you are wondering whether to pay off debt or save money, we've got a few tips for you!
There are two ways to set up these automatic deposits: deposit a set portion of your paycheck into your savings account or set up an automatic transfer from your checking account to your savings account through your bank’s online banking portal. While savings accounts are the obvious choice, you may also want to consider a money market account as a beneficial alternative when your balance begins to grow. Not only do Money Markets generally offer higher interest rates. They also have limited check-writing capabilities, and only six debits are allowed before a customer receives a $10 fee for each item debiting over the six. Because of this, Money Markets make ideal accounts for saving for larger purchases. Both Savings and Money Market Accounts at Peoples Bank only require $25 to open. If you are an adult with a Savings or Money Market Account, you will receive a monthly fee if the Savings Account is not over $100 for the minimum daily balance. The Money Market Account needs to have a $1,500 minimum daily balance in order to avoid a monthly balance fee.
3: Not Monitoring for Debit Card Fraud
The ease of online purchases—which allow you to pay for goods from anywhere with just a credit or debit card—it is much easier for fraud to happen today. In 2021, the FTC Consumer Sentinel Network received nearly 70,000 fraud reports where a debit card was used as a payment method by fraudsters. This resulted in a total loss of over $140 million for consumers.
If your debit card information or debit card are ever stolen, it can be more than just a headache. It can also result in a huge, direct loss of your money if it goes undetected. If your debit card information or card itself is stolen notify your bank immediately so they can help you work through the fraud transaction dispute process.
Peoples Bank offers Fraud Center, which will notify you of suspicious transactions and allow you to act quickly to stop criminals in their tracks and reduce your chance of liability for their fraudulent purchases. Additionally, when you regularly log into your online or mobile banking (at least weekly), you’ll have the opportunity to check your accounts and further monitor for fraud. Monitoring your account with online banking is easy at Peoples Bank. Visit our Online Banking page to learn more and enroll today.
4: Putting Yourself at Risk for Identity Theft
Just like credit and debit card fraud has been facilitated by the internet, identity theft become much easier to commit. That’s why it’s more important than ever to protect yourself from the increasingly-sophisticated methods cyber criminals use to access your personal and financial information. Here are some key ways to keep yourself safe from identity theft:
Secure your online presence with unique passwords and two-factor authentication (2FA). Never reuse passwords, and ensure that all passwords are adequately complex, unique, and not easy to guess. When an account offers 2FA, where your login will be confirmed using a backup method (like a text message with a code), never decline. Utilize password managers to help you generate strong passwords, store them across your devices, and access them easily and securely using 2FA.
Don’t overshare on social media. The amount of information that can be used to verify an identity that we give away on social media is astounding. From birthdays to hometowns to children’s names and addresses, all of this personal information could be used to gain access to a protected account. Minimize your sharing on social media, and reduce the number of friends that you share with to a close, core group of trusted individuals.
Review your credit report regularly. While monitoring your existing accounts is important, identity thieves may use your personal information to open new accounts, ruining your credit or leaving you on the hook for large purchases. Regularly check your credit report for fraudulent accounts and dispute any unusual activity immediately to protect your credit.
Watch out for phishing scams. If an offer—by email, text, social media message, or call—seems too good to be true or is sent with an unusual sense of urgency, watch out. Never give away personal information or financial information over the phone or email, never log in to important accounts through a link in an email or a message, and always verify any unexpected requests independently with the institution or individual using a trusted, alternative method of communication.
Limit the documents you carry. Identity theft doesn’t just happen online. Avoid carrying items like social security cards and birth certificates with you in your wallet or purse. If these items fall into the wrong hands, they can be used to commit identity theft.
Additionally, investing in an identity theft monitoring service could save your time, money, and the stress of combating identity theft in the future. With services like ID TheftSmart at Peoples Bank, you will be notified of any changes to your credit report, including new tradelines, late payments, credit inquiries, and change of address, for as little as $5 each month.
5: Not Saving for Retirement
It’s tempting to put off planning for retirement*, especially if you are just entering your career. But by not planning for retirement, you are wasting the most valuable asset in a retirement plan: time. The earlier you start, the less you will need to save each month to achieve the same results. As The Balance points out in their article, How Much Should I Put in My 401(k)?, if you aim to retire with $2 million, you would need to save $316.25 a month if you start at age 20. However, if you wait just ten years, that figure balloons to $884.76 per month.
No matter where you are on your path to retirement, it’s important to start saving for it. Utilize your employer’s 401(k) or 403(b), maximizing their match. For additional savings (and potential tax benefits), consider opening an IRA at your financial institution. When you work with a financial advisor to define your goals and devise a path to obtain them, it can be the key to retiring on time, and with the resources you need to maintain your lifestyle. Read our blog, How To Start Your Retirement Plan, or make an appointment with one of our Wealth Managers to get started.
See What Peoples Bank Can Do for You
From account monitoring to retirement planning*, we strive to offer the financial services you need to avoid financial pitfalls, keep your accounts safe, and your financial future secure. Call or visit us one of our locations in Iowa, Minnesota, or South Dakota today to see how we can help you steer clear of the bad financial habits that keep you from reaching your financial goals.
*Investment products are not FDIC insured, not a bank deposit, not guaranteed by the bank or any U.S. Government Agency and principal may lose value. Peoples Bank nor its representatives offer tax or legal advice. Please contact your legal or tax advisor regarding your situation.