10 banking mistakes that can cost you or your veterinary practice big

Your bank may not be the scoundrel that some would have you believe, but don't mistake it for your kindly old uncle, either.

Banks are in business to make money, and today's tough economy is causing them to look for ways to take a bigger bite than ever out of your bottom line. What's worse, the bad guys out there are an even bigger threat than banks to your financial well being.

Here are 10 costly banking errors and how to keep them from chipping away at your net income:

1. Failing to steer clear of those new and increasingly oppressive bank charges

You're not the only one feeling a chipping away at your bottom line these days; your bank is dealing with the same tough economy.

One of the techniques most banks are using to beef up their bottom lines is increased service charges. The average ATM service charge doubled between 1998 and 2008, and overdraft fees brought in more than $17.5 billion in revenue in 2008, up from $10.3 billion in 2004, according to the Center for Responsible Lending.

If you allow yourself to get careless and bounce a check, you'll likely get hit with an overdraft fee, one of their most profitable ploys. Most banks now automatically enroll their checking account customers in an overdraft program that allows them to hit you with an overdraft charge of as much as $35 every time you write a check for more than your account balance.

According to a study by the Consumer Federation of America, 16 of America's largest banks charge tiered overdraft fees that go higher after the first one. Some banks set no limit on the number of overdraft charges in a single day, so a little carelessness on your part could cost you a bundle.

What can you do to minimize your chances of getting caught in this trap? Most important: Watch that checking account balance with an eagle eye.

Under public pressure, Congress is considering legislation designed to rein in the raft of some of these new and increased bank fees. In the meantime, you need to protect yourself by staying aware of your bank's policies.

2. Failing to monitor your bank statement closely

Those monthly bank statements may not make for exciting reading, but they could make for profitable reading. Banks can and do make mistakes, so you need to make sure that you're not being hit with incorrect charges, especially in this age of new and unfamiliar charges. It will only take a few minutes to examine each entry on your monthly statement.

3. Leaving an inviting paper trail

Identity thieves and scam artists are lurking everywhere these days, and people who are careless with banking documents are one of their favorite targets. Leaving old bank statements, voided checks, or other banking documents where others may find them makes you an easy target for the bad guys.

Every one of your old or discarded bank documents should be torn into small pieces or, preferably, shredded. Office shredders are now inexpensive enough to make them a wise investment for DVM Newsmagazine readers.

4. Using a weak online password

Online banking is so convenient and easy these days that an increasing number of bank customers (25 percent) now prefer the speed and convenience of conducting their banking transactions on the Internet rather than visiting their local branch, according to a survey by the American Bankers Association. The preference for online banking was followed by visiting branches (21 percent), and using ATMs (17 percent).

While experts agree that online banking is as safe, perhaps even safer, than conventional banking, it's important not to be complacent about your online password. Resist the temptation to use something as simple as your birth date. Use a combination of letters and numbers chosen at random, and never do your online banking from a public computer.

5. Making deposits directly into your checking account

While the interest rate on virtually all banking accounts is sickly these days, it's practically non-existent on checking accounts. That's why you should never make your deposits into your checking account. Instead, open up a money market account at your bank, and ask to have it linked to your checking account. Then make all of your deposits into the money market account where your money will draw a better interest rate (rates will likely be going up soon, making this step worthwhile).

Then, transfer money from your money market account to your checking account online or by phone as needed to cover checks written.

6. Overlooking the dangers of ATMs

Crimes involving users of ATMs are growing nationwide. When you use your ATM, it's important to take basic precautions to protect yourself and your money. Keep yourself aware of persons around you, and make sure that you shield your PIN number when you're typing it in.

Once you've made a withdrawal, put your money safely away before you walk to your car and double check to make sure you have your card with you. The chances of being robbed at an ATM may seem slight, but it can and does happen.

7. Failing to check with other banks for the best interest rate if you need a loan

When you need a business loan, it's only natural to look first to the bank where you do your regular banking, but you shouldn't stop there. The banking industry has become very competitive in these difficult times. The result is a wide variance in such things as interest rates on loans. Always shop around for the best interest rate; there are many other places, especially online, that offer attractive deals whether you are saving or borrowing.

8. Opting out of paper statements

You've probably noticed those inviting suggestions from your bank that you can opt out of receiving paper statements each month. It's a good idea for the bank because it saves them time and money, but it may not be a good idea for you.

It's much easier to spot irregularities when you examine your paper statement each month than it would be on a Web page.

Even if your bank charges you a few cents for paper statements, it probably would be best not to opt out. Failing to carefully examine paper statements each month is one of the most common and potentially costly banking mistakes.

9. Failing to recognize "phishing" e-mails

Every day, scammers send millions of authentic-looking e-mails asking the recipients to provide sensitive personal information. On the pretext of being from a legitimate company or bank, the message will often instruct the recipients to click on a link that sends them to a fake website. These fraudulent sites will ask for information such as name, address, phone number, date of birth, Social Security number, and bank or credit card account numbers.

Never, never provide such personal or business information in response to an e-mail, no matter how authentic it may appear. Legitimate companies and banks will never ask you to provide that kind of critically important information in response to an e-mail.

10. Failing to develop a personal relationship with your branch manager

If you want to be sure that you're getting the most favorable treatment from your bank, it's important to establish a personal relationship.

Don't hesitate to ask for a meeting with your local branch manager to introduce yourself. Tell the manager a little about yourself and your practice. When it comes to straightening out a problem or asking for a loan or other help, there's no substitute for being personally acquainted with the powers-that-be.

Banking is a tricky and complex business these days. As a business customer, you need to keep yourself up-to-date on the most current banking practices. Following these suggestions will give you a head start on maximizing your financial potential.

William J. Lynott is a retired management consultant and corporate executive who writes on business and financial topics. He can be reached at lynott@verizon.net or blynott.com.