Misconceptions about your finances can have a lasting impact on your financial wellbeing. Understanding the truth behind common myths can help you take control of your financial future. Let’s debunk a few myths:
Myth #1: All checking accounts are the same
Checking accounts aren’t one-size-fits-all. In reality, you can choose from a variety of offerings, each with different features and fees.
When choosing which type of checking account is right for you, consider:
Cost management: Are there overdraft, ATM or monthly maintenance fees? Is there a safety net for accidental overdrafts, like Ally Bank’s CoverDraftSM? Note: CoverDraft isn't a line of credit or a guarantee. If your purchase isn't covered for any reason (let's say the transaction exceeds your CoverDraft limit, for example), it will be declined - but we'll never charge you an overdraft fee.
Features and benefits: Can you access your paycheck before payday with early direct deposit? Are there digital tools like Ally Bank’s spending buckets to keep your expenses on track?
Accessibility: Can you pay your bills online? Does it have mobile banking capabilities?
Read more: 8 ways our checking account, the Ally Bank Spending Account, can simplify your finances.
Myth #2: Carrying a balance on a credit card improves your credit score
According to a survey from U.S. News & World Report, 48% of people believe carrying a credit card balance increases your credit score. While you need to use your credit card to generate a credit score, having a revolving balance month-to-month doesn’t do you any favors. And carrying a balance could lead to costly interest charges, which can become difficult to afford.
To improve or maintain a good credit score, aim to pay off your credit card balance in full every month. Keeping your credit card usage below 30% of its credit limit can also indicate responsible spending habits and money management to credit bureaus that generate your score. In turn, you could land benefits such as lower interest rates, easier approval when renting or applying for loans and better credit card rewards.
Myth #3: Buying in bulk is essential to saving
Think your big grocery haul resulted in big savings? Buying in bulk does lower the per-unit cost, but it can also lead to higher overall spending. To make the most of your bulk purchase, have a plan beforehand to avoid impulse buys.
With an Ally Bank Spending Account, you can use our spending buckets tool to allocate funds for shopping at big-box stores. Meaning you can make the most of buying in bulk and still stay on budget.
To make the most of your bulk purchase, have a plan beforehand to avoid impulse buys.
Myth #4: Credit unions are safer than banks
Banks and credit unions are essentially identical when it comes to safeguarding your money. Bank deposits are backed by the Federal Deposit Insurance Corporation (FDIC) and credit union deposits are protected by the National Credit Union Share Insurance Fund (NCUSIF). This means deposits in either facility are federally covered up to $250,000 (including principal and interest) per depositor, per qualifying account ownership category. So you can rest assured your hard-earned money is safe up to those limits.
