Living in a world financial crisis, everyone is paying attention to where their dollars are going. Your bank is no exception, and they don’t want you’re dollars to walk out their doors. Here is a list of 10 ways banks work to keep your money for themselves.
10. Incentive Trap
With any successful business they want to make money, and are willing to offer special offers for a limited time as a marketing tool to bring your business to their bank. However, their sales people, I mean tellers, may forget to mention that these promotional rates are only temporary. Some of these incentive traps include low opening rates, reward point systems, and extended payment periods, just to name a few.
9. The Service Auction
While credit and loans seem an easy way to cover expenses in the short-term, never forget that the bank isn’t letting you borrow their money without getting something out of it. Too often the bank is getting more out of it than you are. Selling loans, investment, vehicles, and credit lines is how the bank and its tellers and bankers make a living. These expensive services can lead to damaging credit ratings down the line, especially for young inexperienced bank customers.
8. Negative Payment Hierarchy
If you are making large purchases with high interest rate credit cards, you might not be paying off your debt as quickly as you think. This is because they are based on a principle of negative order of payment, meaning your smallest debts with the lowest rates are eliminated first while you continue to rack up high interest on your remaining large debts. Despite card agreements, your interest rates often fluctuate whether your banker will admit it or not.
7. Bill Payment Charges
While you would think when it comes to making your payments on time the bank would be happy to leave you alone, many banks make service charges for online bill payment and/or money transfers. This isn’t true for every bank, so pay attention to your payments online or call and ask your bank if they have an online payment charge. If they do charge consider trying to negotiate or ask about limit issues.
6. Hidden Fine Print Fees
Account upgrades, promotions or offerings, and “free” overdraft protection limit are all services a bank will offer to provide you, but you should be careful to read the fine print for initial fees. Another place where your bank could be collecting hidden fees are individuals who heavily use their debit cards. Banks may charge you service fees for additional card uses beyond a certain transaction limit.