New Year’s resolutions are easy to make in January, but will they still be in place by the end of December? The nice thing about financial resolutions is you can take actions in January that will continue to pay off throughout the year.
Here are eight smart banking resolutions that can help protect and grow your money during the remainder of 2025 and beyond.
[Read: Best Savings Accounts.]
See if Your Savings Account Rate Is Still Competitive
The Federal Reserve made three rate cuts in the second half of 2024, and expects to lower rates further in 2025.
The Fed’s rate policy influences bank interest rates, but does not directly control them. So, when the Fed makes rate changes, banks react in different ways.
With the Fed being so active, it’s no time to be passive about the rates you’re getting on your personal savings account, Jillian Krenk, CEO of MoneyWellth points out. “Many people fail to shop around for better rates or terms, staying loyal to banks that may not serve their best financial interests,” Krenk says.
You may be more likely to miss out when rates are on the move. With the Fed cutting rates, some banks will be quick to do the same to preserve their profit margins. Others will leave rates higher, hoping to attract new business as a result. In this environment, Krenk says, “Consumers should shop around for banks offering better interest rates or lower fees, as competition among financial institutions may work in their favor.”
It may turn out that even with interest rates in motion, your bank is still offering one of the best rates available. But you won’t know until you check.
Check the Fee Structure of Your Personal Checking Account
The Consumer Financial Protection Bureau recently announced a new rule limiting the size of overdraft fees. Naturally, banking trade associations are suing to block it.
It remains to be seen whether the new rule will survive the legal challenge, not to mention the policies that may come with the new presidential administration. In the meantime, the uncertainty may create some chaos for bank fees.
This matters even if you never overdraft your account. If the CFPB succeeds in capping overdraft fees, banks may adjust other fees to make up for it. Krenk says, “Increased fees for overdrafts, wire transfers and account maintenance are possible as financial institutions look to recover costs.” So all kinds of fee changes are on the table for 2025.
In this situation, some timely bank advice is to keep an especially close eye on the fee schedule of your personal checking account. This is also a reminder that the best fee schedule for you depends on how you use the account.
A customer who frequently overdrafts their account may value low overdraft fees most of all. Someone who uses ATMs frequently may want to look for a bank with an extensive network of free ATM locations. A person who does neither of those things may consider having no monthly fee the top priority for their checking account.
With changes to fee rules in play, be sure to revisit your checking account’s fee schedule now and then. Make sure the type and level of its fees are well suited to how you use the account.
Reconsider Your CD Strategy
Interest rates fell in 2024 for the first time since 2020, and only the second time in the past decade.
With this change in direction, it’s smart banking to rethink the length of the CDs you choose. The shift in both the level and direction of rates changes where long-term and short-term rates stand relative to one another. It also affects the benefit of locking in rates for longer as opposed to keeping money more liquid.
So, don’t just let your CDs roll over automatically in 2025. Give some thought whether you want to change the length of your CDs instead of opting for more of the same.
Have Your Pay Directed to Savings Instead of a Checking Account
In the third quarter of 2024, Americans saved just 4.3% of their disposable personal income. That’s well below the 50-year average of 7.4%.
As the chart below shows, this low saving rate is nothing new. The saving rate has been below average for most of the 21st century so far. One simple change can help boost your saving rate. If you have your pay directly deposited to your bank, consider having it go into your personal savings account instead of your checking account. Then you can just transfer one budgeted amount from savings to checking account with every paycheck.
Doing this could help you stick to a savings budget. If you have money readily available in your checking account, you’re more likely to spend it. If you transfer only a budgeted amount into checking, it should help you save part of every paycheck.
Make the switch to Digital Banking
There’s a generational divide in how Americans like to bank. According to an FDIC survey, people aged 15 to 24 are four times as likely as those 65 and older to bank primarily via mobile apps.
Older customers were raised on doing their banking in person, at a local branch. While today’s banking industry offers a choice between the personal touch of visiting a branch and the convenience of banking online or by mobile app, that in-person experience is getting harder to find.
FDIC statistics show that the number of bank branches peaked in 2009, and has since fallen by 15%.
This is a trend that can feed on itself, John Beaver, founder of Desky, points out. “As more people shift to Internet banking, many banks might opt to reduce the number of their physical branches, causing traditional banking locations to dwindle,” Beaver says.
For banks, there’s a cost advantage to not having to maintain a network of physical branches wherever they have customers. So while technological advances should continue to improve the digital banking experience, finding a convenient place to bank in person may get tougher.
Beaver says, “Stay informed about the updated changes to banking services, particularly those about branch availability and new digital offerings.” In particular, if your local branch closes, take the opportunity to check out digital banking. You may find you get to like the convenience. In addition, access to a wider range of choices online might help you find personal bank accounts with higher interest rates and lower fees.
[Read: Best Online Banks.]
Secure Your Bank Account Access
For all the benefits of digital banking, it has created some new risks. Cyber thieves are always trying to find ways into people’s accounts to siphon off money.
If technology has created these risks, suggests Beaver, tech can also be used to defend against them. “To safeguard your accounts, create strong, less-predictable passwords, and always turn on two-factor authentication,” Beaver says.
Also, try to avoid accessing bank accounts via wifi networks. Thieves may intercept your connection to the network to steal your account information — and ultimately your money. Don’t think just because you have a traditional bank account that it’s immune to cyber theft. Even if you do all your banking at a branch, the bank’s information may still be a victim of a data breach.
These smart banking tips shouldn’t frighten you away from digital banking, however. Again, technology like two-factor authentication can be used to protect your account. Ultimately, the ability to check your balances and transactions more regularly, along with options like account activity notifications, can give digital banking security features that traditional banking lacks.
Make Sure Your Deposits Are Fully Insured
Alongside banks deploying more technology, non-bank technology companies are offering services that have some banking characteristics. This sector of the market is called fintech, short for “financial technology.”
Fintech companies may not offer the same deposit insurance as traditional banks or credit unions. In a September, 2024 statement, CFPB director Rohit Chopra warned about the harm to customers that might result:
“Deposit insurance and the special FDIC resolution process protect people if the bank fails and they retain quick access to their cash. When nonbanks engage in deposit taking, whether directly or in partnership with a bank, all these protections may not apply.”
For example, in many cases a fintech company will collect deposits from customers, and then transfer them into an FDIC-insured bank. It may describe this process as providing FDIC insurance for those customer deposits, but that may not be completely accurate.
Here are some things that can go wrong:
— There’s an inevitable delay when the fintech company collects assets before those assets are deposited into a bank. Financial collapses can happen quickly, and if something goes wrong between when you send money to the fintech company and when it deposits the money in a bank, it won’t be insured.
— If the fintech deposits the money it has collected into the bank in bulk rather than in the names of individual customers, it may be considered all one deposit. This collective deposit might easily exceed the $250,000 deposit insurance limit.
— If you make a deposit with a fintech company and also happen to have a large personal bank account with the bank it sends its money to, the combined total may exceed the $250,000 limit. That limit is applied per depositor at each bank, even if the money is split into different accounts.
It’s always smart banking to make sure your deposits are fully insured. In today’s environment, you need to make sure they’re insured directly and not through a fintech intermediary.
Decide Which Bill Payments to Automate
One piece of bank advice you may hear often is to automate your bill payments. That’s not always the right advice for all bills.
Certainly, arranging to have bills sent to your bank so they can be paid automatically out of your personal checking account can be a great convenience. It can also help you avoid late fees and damage to your credit score which could result from missed payments.
Still, you may want to pick your spots. Automating payments which are a fixed amount every month is smart banking. You can predict how much money will be coming out of your account for those payments, and make sure you have enough money available.
However, automating variable payments is a little more dicey. For example, credit card bills change from month to month. If you automate those payments, you won’t know in advance exactly how much is coming out of your account.
Unless you keep a large balance as a cushion, you may be better off not automating variable bills. Also, this will allow you to check those bills first to make sure the amount is accurate. One option to consider is automating your minimum credit card payment (to avoid late payments) and reviewing your bill before paying the entire balance.
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