Choosing a bank account can be more difficult than a lot of people realize. Some people may think that all bank accounts are more or less the same – but in fact, different bank accounts can offer very different advantages.

There are a few things to think about. First of all, what kind of account do you want? A regular current account, perhaps, or a bad credit bank account? There’s also a ‘managed’ account, in which the account provider takes care of budgeting for you. An example of a managed bank service account can be found here.

Interest rate
A lot of current accounts offer little or no interest on your balance at the moment due to the low base rate, but some still do pay a reasonable rate. If you regularly receive money into your account (e.g. your salary), it could be worth finding an account that will offer something back on your balance.

But you will have to ‘balance’ this against the other benefits on offer – you might find that you’re better off with an account that doesn’t pay interest if the other benefits are good enough.

Overdraft facility
Even if you’re the kind of person who avoids debt like the plague, many people would argue it’s important to have access to some kind of credit for emergencies. Most bank account providers offer some kind of overdraft facility, and it’s worth comparing what the different accounts have to offer.

Ideally, you’ll want to find an overdraft with the lowest possible interest rate, but you’ll also have to consider the overdraft limit (an account with a £1,000 overdraft limit provides more protection than one with a £500 limit – but if you’d prefer to avoid temptation, you might prefer the lower limit after all).

An overdraft may not be necessary if you have a lot of money in savings or if you have a suitable credit card that you’d rather use, but it could still be useful to have.

Additional benefits
Increasingly, many banks are starting to offer ‘extras’ to entice customers. This might include things like free insurance, roadside recovery or access to better deals on the account provider’s other products, such as loans or mortgages.

Sometimes, the value of these extras can exceed what you would get back from an interest-paying account, so it’s well worth thinking about.

No related posts.

Everyone is hurting in our current down spiraling economy. Markets are down, investments are tough-going, people are worrying about losing their jobs. Conditions are different now, and your financial planning should change with the new recession conditions.

There is no one rule for financial planning, and this statement holds true especially during a recession. Your financial planning strategy will depend on your age – whether you are near retirement or not. It will depend on the kinds of assets you own and the business or career you have established. Financial planning will depend on how much risk you are willing to tolerate – there is always a tradeoff between risk and expected return. In other words, everyone has different needs when it comes to money.

Current Economy Investing Strategies:

That being said, there are some commonly agreed upon changes you should make. First – investments. You will want to shuffle your investments around to adapt to the recession. One theme when it comes to recession moding is having liquid assets. Job security is at a low, and if you find yourself out of a job, you will need access to cash; you do not want to have to borrow money.

If you have investments in stocks, you may be tempted to liquidate them for fear that the stock market will fall even further. Common advice says don’t do it – it can cause you to lose a very large amount of money in a very short amount of time. The prices for your stocks may be falling right now, but it is important not to panic and sell. If you have the time to wait out the recession, it is a better idea to take advantage of the low stock prices and buy more stocks for the better times ahead. As always, it is a good idea to diversify investments to spread out the risk – with a variety of stocks including foreign stocks, real estate, government securities, etc. – . The advantages of a mutual fund apply just as much now that we are in a recession, perhaps even more so given the volatility of the markets. As said earlier, there is no rule of thumb when it comes to how you should invest your money. Stocks are a risky investment and not very liquid. You do not want to have to sell your stocks for cash in the current market if you lose your job.

Reaching Retirement:

For the older investor, the recession is coming awfully close to retirement. Just like in a healthy economy, this means that you want to be more conservative with your investments. But because of the recession, you may not have time to wait for the stock market to pick itself up again. Older investors especially will want to put less money in risky investments like stocks to keep assets safe and to maintain liquid cash. To recession-mode consider keeping a larger than usual sum in a money-market account and in your regular savings account.

Reducing Debt & Spending Reduction:

Debt is something you will want to take care of to recession-mode your financial planning. If you are in debt you are paying interest, money you could be saving. Debt also means that you are making monthly payments, payments you may not be able to cover if you lose your job. Because of the recession, you will want especially to get rid of credit card debt as soon as possible. Credit card debt can kill you with interest rates upwards of 15-20 percent. If you have a mortgage or an auto loan, consider that interest rates are at records lows. It may be smart to refinance these loans. You may need to cut back on expenses to successfully pay off debt. This may require cutting luxuries – extra TV channels, the new clothes, etc. There are an endless number of tips you can take advantage of to cut expenses. To share a few, you might share transportation and rooms, stop smoking, cut memberships and subscriptions, and use coupons.

To summarize, reconsider your investments, keep liquid assets, and settle debt. Armed with this advice, you can begin recession-moding your financial planning.

Related posts:

1. Financial Planning in a Bad Economy – Part 1 Budgeting and Credit Cards This post is a two part series on financial planning...
2. Financial Planning in a Bad Economy – Part 2 Shopping Banks, Safe Stocks, Dividends This continues the two part financial planning series. Previously we...
3. Receive Investor’s Business Daily 30% off Print Price Investor’s Business Daily is running a 30% off Print Price...