How to Simplify Your Banking and Improve Your Finances

By simplifying your banking and financial life, you’ll find it easier to avoid late fees or overdrafts and to take advantage of potential account benefits.

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The popularity of online banking, combined with the growing number of alternative ways to make or accept payments online (e.g., Dwolla and Paypal), means many people have to keep track of several financial accounts. The more accounts you have, the harder it is to keep everything organized and the more likely you are to make costly mistakes. If you find yourself moving money from one account to another, or missing payments because there are so many accounts to track, it’s time to simplify your banking.

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Debbie Dragon
By simplifying your banking and financial life, you’ll find it easier to avoid late fees or overdrafts and to take advantage of potential account benefits, like rewards programs.

Consolidate Bank Accounts. Take a look at your existing financial accounts. How many savings accounts and checking accounts do you actually have? Consider also any financial payment services you use online, like Paypal, Dwolla, or Google Wallet. Do some of these accounts charge you more fees than others that you could stop using?

There’s a good chance if you have multiple bank accounts, you have a small amount of money in each account. If you’ve had a few overdrafts in a checking account due to oversights or mathematical errors—but had enough money in other accounts to cover those mistakes—it would be to your benefit to consolidate accounts to make it easier to keep track of your balances.

Look at the terms of each bank account to find the savings account offering the best interest rate or debit-card rewards program, and the checking account with the lowest fees or best features. If you have automatic deposits and payments, make sure they are all going in or out of the accounts you plan to keep, then close any bank account that you don’t need.

Spend Less Time Monitoring Your Finances. With fewer bank accounts to keep track of, you can better monitor what is happening in each. Not only is it less stressful to keep track of fewer accounts, you’ll spend less time on money-management activities. If you’re trying to reduce unnecessary spending, having all your spending coming out of one or two accounts makes it easier to find and pinpoint where the money is being spent and where you may be able to cut back and save money. It’s better than trying to monitor several accounts over a period of time.

Keeping fewer bank accounts also means you can better take advantage of any debit-card rewards programs or other bank benefits, such as those that reward you for keeping higher balances in your account. You can also minimize the amount of money you keep in a bank account that doesn’t earn interest.

Consolidate Credit Cards and Loan Balances. If you have multiple credit cards and a few loans, make it easier on yourself by consolidating them, if possible. Having too many credit cards puts you at a higher risk for missing a payment or sending one late, which can add up to a lot of money in late fees over the course of the year. Furthermore, debt consolidation offers a motivation boost when you are able to focus on tackling a single-debt balance.

Set Up Automatic Payments. Once you’ve consolidated your bank accounts and credit cards to a more reasonable number, consider setting up automatic payments through your bank to pay your bills. Once set up, automatic payments will ensure all of your bills are paid without further action on your part. This will eliminate any accidental late payments and further reduce the amount of time you spend managing your finances each month, but it is only beneficial if you know for sure you will have enough money in your account to pay for all of the expenses you schedule for payment.

Consider your financial situation carefully before enrolling in automatic payments, because if you have variable income or anticipate possible cash flow shortages, automatic payments can result in a number of overdrafts that could cost you even more than paying the occasional late payment.

Debbie Dragon is a contributor to, where she writes about personal finance, taxes, and banking.