Your bank statement mailed every quarter could very well have a few surprises in store for you. Even if you manage to maintain that pesky average quarterly balance (AQB) and have not missed your equated monthly instalment (EMI) payment, some baffling deductions always manage to creep into the statement.
“Customers often haggle with banks for each and every rate attached to accounts and loans,” says Wribhu Tyagi, chief executive of Deal4Loans, a New Delhi-based online loan provider. “To avoid the situation, many banks deliberately conceal certain charges from customers.”
Bankers, however, complain that although a schedule of charges is mandatory material in all welcome kits to customers, the latter don’t take time out to flip through it. “Out of a total fee income, 80% of a bank’s income comes from charges that could easily have been avoided by customers,” says K. V. S. Manian, group head, retail liabilities and branch banking of Kotak Mahindra Bank. Mint gives you a primer on some hidden fees:
• Cheque bounce charges:It is common knowledge that if you write a cheque and it bounces because you have insufficient funds in your account, you have to pay a penalty. But what many don’t know is that the cheque receiver is also penalized for the failed transaction and the fee could be as high as Rs50.
• Inter-city money transfer: Except for online transfers, banks charge you for money transferred to your account from any outstation account. Most of us think this is a complimentary service offered by banks—but it isn’t. Banks usually charge you anywhere between Rs30 and Rs150 as handling charges for any money transferred to your account from an outstation account.
• Anywhere Banking: Billboards and brochures that read “Anywhere Banking” don’t mean that all transactions are free. With most banks, only cash deposit and withdrawal transactions are free and for all other transactions, you never come to know when money automatically gets deducted from your account.
• Debit card charges: If you think there are no annual fees on debit cards, check again. Most banks waive debit card charges only for the first year and after that charge anywhere between Rs100 and Rs500—automatically deducting the sum from your account. You should be aware of the dates on which these charges are deducted because if the date coincides with your EMI due date, you might end up having insufficient funds in your account and pay both a penalty for that and for defaulting on your instalment payment.
• Collecting debit card after 15 days: If you don’t collect your debit card within 15 days of it being processed, you may end up paying up to Rs100 as penalty.
• Documentation and stamp charges: Some banks charge you separately for documentation and stamp costs against loans. Many people think the charges are clubbed under the processing fee.
• Average quarterly balance:Although all customers know about AQB, they still end up paying a penalty for defaulting on maintaining the balance. AQB is the sum of daily closing balance for the quarter divided by 90 days. Account-holders say it’s not easy to understand the way AQB is calculated.
• Pre-closure charges: For loan pre-payment, most banks charge 2-3% of the outstanding balance as pre-closure charges. As customers start haggling for a waiver of these charges, banks usually avoid disclosing this fact to customers, unless asked.