Are You Leaving Money on the Table?

I’ve never found someone that gets excited about shopping for insurance or banking products. But the importance of doing so with some frequency is often overlooked. Why? Because many companies raise your rates, keep you in an outdated product, charge you fees that others don’t or aren’t giving you valuable bells and whistles. This can all add up quickly.

Let’s talk about a few examples:

Checking account. No one EVER wants to deal with changing their bank. You’ve spent years inputting all of your bills for electronic bill pay or used your ATM card for recurring bills for Hulu and Netflix all the way to your Starbucks card auto reload. Say a bank charges a $3/mo fee and charges $2 every time someone uses an ATM that isn’t theirs. That $2 charge is on top of what the ATM that was used charged the person. This adds up quickly. If you hit the ATM a lot, look for a bank that has convenient ATMs or does not charge you for using other ATMs. If you don’t use ATMs much, find banks that don’t charge a monthly fee like credit unions. This adds up quickly and with a little research, can be minimized.

Carry-a-Balance credit card. The average American household carries $5,700 in credit card debt. Let’s say this is you and your card has a 19.9% APR. You pay $250/mo on the card which means it will take you 2.5 years to pay off this debt with no new charges. Over that time, you will pay about $1,500 in interest. With a quick shop-around online, you will find that many banks offer low-interest, no-frills cards. If you switched to a card that was say, 14.9% APR, you would pay that card off in 2.25 years and you would have paid about $1,000 in interest. Said another way, you save $500 and are debt-free a few months faster. If you haven’t done this in a while, it is time to review.

Pay-in-Full credit card. You’ve had your credit card for 5 years. It has a low interest rate but no cashback or rewards features. You spend about $6,000 on it a year and pay it off monthly. Hence, you pay no interest. Cashback cards now offer an average of 1.5% cashback. On $6,000 in annual spend, you just left $90 on the table. In the five years you had the card, you “lost” $450. And most of those cards do not have an annual fee. You don’t want to jump around too much with your credit cards as opening and closing accounts does have an impact on your credit scores. However, a review every couple of years would be a very good idea.

Auto Insurance. There are a few factors in your control that have a big impact on your rates; coverage amount and deductibles. The higher the coverage and/or lower the deductible, the more you pay in premium. If you have an older car that you don’t mind if there is a dent or ding on it, you could be paying more than you need to with low deductibles or high comprehensive coverage. Additionally, your insurer likely increases your rates about 3% per year without you doing anything wrong or differently. Other times, your rate may increase significantly in one year. Your average premium is $1,600 per year. In five years, you’ve paid cumulatively almost $500 more for no added benefits with an insurer’s average annual increase. If you shopped your auto insurance once a year and only saved the 3% that was your annual increase, you save yourself the $500 over five years. But as you’ve all seen on TV, insurance companies tout that people save $300, $400 even $500 when they switch, so your savings could be even greater. Did you know that most insurers also offer home and auto discounts and other relationship discounts that can help you save significantly on your premium? I recommend you dust off those policies and make a few phone calls once per year.

Mortgage. You don’t want the hassle of refinancing and mounds of paperwork. Stop right there. Rates are still very low, and if you didn’t refinance in the last 7 years, you’re really missing out. Today’s 30-year fixed rate is about 3.9%. Let’s say your mortgage rate is at 4.5%. If you have a $175,000 mortgage your current payment would be $887/mo (without taxes/escrow, mortgage insurance, etc). If you refinanced to 3.9%, your payment would go down to $825/mo. Maybe $62/mo doesn’t seem worth it. Well, over the course of a 30-year loan, the total cost difference = $22,320. My guess is, unless you are a gazillionnaire, that amount more than gets your attention. This isn’t something that you can, or should do with great frequency. In fact, now is the time to get on it and unless you move, you shouldn’t have to do again for quite some time. The Fed raised rates recently and has already signaled that they plan to raise rates multiple times in 2017. This is something to tackle over your holiday break.

Those are just a few examples. And if you’re like most people, you’ve never thought about it and certainly haven’t wanted to. Once a year, just like Spring Cleaning, you should do that with your finances. It can save you a lot more than you think. All of us could use a few more dollars in our pocket (or at least a few less dollars going out of our pocket) so take control today.

DISCLAIMER: While I have spent years in the financial services industry, I am not a licensed or registered financial advisor. The data above was pulled from the interwebs and derived using basic financial calculators online. For your specific circumstances, you should speak with a financial advisor, your bank and/or your insurance company. If you are considering a new credit card, check these resources out first: https://www.myfico.com/crediteducation/brochures.aspx

SHAMELESS PLUG: If you want help in shopping for these banking and insurance products, SocialMari.com is about to launch which will pay you to hear insurance and banking proposals from our trusted partners. Starting in January of 2017, we will pilot with mortgage products in the Phoenix market but plan to quickly expand our products and markets to help even more people save. To learn more, watch our intro video: