Bank charges you should know
While you’re unlikely to notice them unless you carefully go through your statement, here’s a list of five bank charges that do merit your attention, particularly because they are avoidable.
It is often assumed that banking services are free. This is inaccurate. Only a few services are absolutely free if you don’t ‘overuse’ them. For most banking services, there always is a nominal fee. For example, your ATM/debit card costs you at least Rs100 a year, unless you hold a salary account or are an SBI customer. If you use over your quota of free cheque leaves a year (usually a booklet a quarter), you’ll be charged Rs1.5 a leaf. That’s a miniscule amount, like most other bank charges. But here are a few charges that are worthy of your attention, with ways to avoid them:
Phone banking: If you’re a Standard Chartered customer, you should avoid ringing up the bank for minor concerns; save them for when something really goes wrong. This is because you’re only allowed two free calls a month to their customer service centre. From the third call onwards, you’ll be charged Rs50 per call. Seeing as how bank-related problems aren’t always easily resolved in a single call, you could end up incurring high charges debited straight from your account. Note that these calls aren’t chargeable if you’ve lost your debit or credit card.
Solution: Use the IVR instead of calling the customer service centre.
Non-maintenance of balance: You may know that not maintaining your account balance results in a steep fine. With most banks, this is in the range of Rs250-Rs400 per month (if a monthly balance is to be maintained) up to Rs750 per month (if a quarterly balance is to be maintained). The reason basic services are cheap is that the bank has access to your idle funds, so when your balance isn’t maintained, the penalty may be justified. But did you know that there are plenty of other services that become costly if your balance isn’t maintained? For example, HDFC Bank will charge you Rs50 per call if you ring up their customer service department while not maintaining your minimum balance and Kotak will charge you Rs25 per month for your otherwise free debit card, Rs4 per Rs1,000 you deposit in cash and phone banking at Rs50 a call.
Solution: What becomes chargeable after you go below the average balance differs with each bank and for each account too. If you are slapped with the non-maintenance of balance charge, check the service charges of your bank.
Inoperative account: Is there a salary account you don’t use anymore? Or simply a bank account you’ve forgotten about? If it’s been two years, your bank could slap a charge no matter what your account balance is. Some banks don’t charge anything (ICICI and Citibank, for example), but many do. Among those that do, the amount can vary significantly. Kotak, for example, charges just Rs25 per quarter, but ING Vysya charges Rs200 per quarter. And if you have withdrawn all your money from your account, it could get ugly, as this would affect your credit score.
Solution: Shut your inoperative accounts, of course. They’re of no use. If the bank is placing obstacles, file a complaint.
Upgrades to premium cards: Ever been offered a seemingly fancier debit card? If you’re price conscious, you may want to say no. While the card may allow you to withdraw money internationally (which is much more expensive than a forex card, by the way), you’ll be paying much more every year. At Axis Bank, for example, a debit card could cost you as much as Rs1,000 a year.
Solution: Say no if it is offered to you. If you are told that it is a free card, inquire if this means it will always remain free or if it’s a first-year offer.
SMS charges: Banks now charge you for the SMS alerts RBI ordered it to send its customers. The charges are low, at Rs60 per year, but you needn’t pay at all for them. This is because the banks have to provide the alerts that RBI expects them to provide free of charge. Currently, you can get alerts for withdrawals over Rs5,000 free of charge.
Solution: If you don’t want to pay a single rupee, ask only for the free alerts. You’ll be notified each time more than Rs5,000 is debited from your account.
Cash transactions: If you tend to deposit cash into your bank account regularly, you should know that banks charge you for overuse. At ICICI, for example, even at the base branch, you will be charged Rs90 from the fifth time you deposit cash into your account in a single month. ICICI is the only one that charges such a high fixed amount though; the others generally charge Rs2 per Rs1,000 you deposit if you do more than two such transactions in a month.
Solution: Check the charges the bank will levy on such a deposit.