6 ways to reduce banking service charges
With banking charges being revised in the new calendar year and other charges that would be applicable starting April 1, 2013, customers need to change their banking habits.
Like other daily costs that are heading north, banking too is getting to be an expensive exercise. While banks have certainly become more technology-savvy and customer-centric, they can hardly be called pocket-friendly.
Even basic services such as cash transaction, updating your passbook and receiving transaction alerts now have defined annual limits for savings bank account customers. And this is true, not only, of private banks but also, nationalised and public sector banks.
The situation got to point where the RBI had to step in and notify that “Banks cannot design any product which is not in tune with the basic tenets of banking… Further, they are also advised to refrain from incorporating clauses in the terms and conditions which restrict deposit of cash over the counters.”
Here’s how you can avoid service charges at your bank by making minor changes in your banking behaviour.
Update your passbook regularly
If you have been putting off the bank visit for a while now, this may be a good time to drop in and update your passbook. Banks have started charging for passbook updating or providing transaction records beyond a certain time limit. Union Bank of India charges its customers Rs140 for providing records older than a year. ICICI Bank charges Rs100 for retrieving transaction records that are more than a year old, while HSBC charges for updating passbook with records beyond the past three months.
Ask for online alerts
If you have registered with the bank for alerts on your mobile phone via SMS it is time to change this. Banks have a monthly or a quarterly fee for transaction alerts through SMS. Axis Bank charges Rs5 per month for SMS Alerts, while ICICI Bank and HDFC Bank charge Rs15 per quarter. That doesn’t mean you give up on the security of receiving transaction alerts. These alerts are free if sent via email.
Update your address
While you have informed your friends and relatives about your change in residence, the bank needs to be notified too. If a courier sent by HDFC Bank to your old address is returned, you will have to shell out Rs50. Also, make sure there aren’t any errors in the address registered with the bank as the courier company’s remark of “No such address” too can lead to this charge.
Close accounts when not in use
Banks slap the non-maintenance of balance fees even on dormant accounts. So if your account has been inoperative for more than two years and doesn’t hold the minimum balance charge there will be additional charges annually. For instance, Punjab National Bank will penalize a person with an in-operative account where balance is not maintained to the extent of Rs150 per quarter. These charges could balloon to a high amount if not cleared for long durations.
Don’t go to the bank too often
Remember that branch banking is a costly affair. Banks have been surreptitiously dissuading customers from carrying out transactions at the branch. RBI however, took stern action against some banks that had put a blanket ban on cash deposits at branches and diverted customers to ATMs. “Banking, by definition, means acceptance of deposits of money from the public for the purpose of lending and investment… incorporating such clauses in the terms and conditions which restrict deposit of cash over the counters also amounts to an unfair practice. Banks are, therefore, advised to ensure that their branches invariably accept cash over the counters from all their customers who desire to deposit cash at the counters,” the central bank said in a Master Circular issued to banks in July 2013.
Though cash transactions at branches are allowed there are limitations to such transactions. Today Axis Bank allows first 5 cash transactions per month at a bank branch free of cost. Cross this limit and you will need to shell out Rs100 per transaction. ICICI Bank too allows first four cash transactions in a month for free; beyond which you would have to pay a minimum of Rs150 per transaction. If you are transacting from another city then only the first transaction is free.
Not just physical cash transactions at branches, but you need to also keep a check on the number of debit entries in your account. Bank of India allows 10 customer induced debit entries in a month free of cost and beyond this charges Rs 10 per entry. While you cannot limit your banking transactions just to reduce charges, using the ATM and internet more frequently would be more effective as these transactions are not limited.
The SBI too has put a cap of 30 debit entries half yearly beyond which it would charge Rs5 per entry. Remember, transactions at other bank ATMs are also counted and charged accordingly by SBI.
But, there is one blunder customers are better off avoiding – that of depositing cash in the cheque drop boxes. It is not only an unsafe banking practice, but leads to heavy penalty as high as Rs300-500 per instance if done repeatedly.
If you have been wary of phone banking, internet banking and card usage thanks to the fraudulent transactions reported each day, it is time to shed your fears and register for the new age banking services.
This is because charges of simple requests such as duplicate statement, PIN regeneration are either nil or lower compared to the requests made at branches. At most banks requesting for a duplicate PIN via IVR is free, but if you do it through the non-IVR route you would have to pay Rs100.
Similarly, ICICI Bank would reduce the charge by half to Rs50 if you ask for a duplicate statement through IVR-based phone call, ATM or internet banking, instead of talking to the customer care executive directly.
Though phone banking is presently free through the non-IVR route, except if you haven’t maintained the balance, banks have hinted at making the non-IVR based phone calls chargeable. “The PhoneBanking charges will apply on transaction that are available on the IVR but are done through the PhoneBanking Executive,” states HDFC bank.
The banks have taken steps to ensure maximum safety and hassle-free banking for their customers. Better use of technology for everyday banking needs can help you save better.