Over the last couple of years, the United States banking system has gotten into a tremendous amount of trouble resulting in large bank bailouts by the government and global effects on our stock market, triggering a recession. So it comes as no surprise that they will try to make up for their losses in any way possible even if that means pulling a fast one on us.
Watch out for these sneaky bank tactics that may be affecting you and your finances.
1. “Your fees will only increase with time”
Fact: Those occasional overdraft fees and ATM service charges are ever-increasing. The banking industry has made a significant profit off of these seemingly “small” fees that add up to a large amount — approximately $17.5 billion in profits during 2006 solely from overdraft fees.
How to Fight Back: Make sure you are always up-to-date on your bank statements and keep track of your various accounts. Don’t just simply scan your total balance, but check that you haven’t gotten charged any small fees that may go unnoticed.
If you were charged, give your bank a visit in person instead of phoning them. Speak with a supervisor and ask them to waive your fees. Usually they will agree to it if it’s the first time you’ve ever gotten charged or have a good standing with the bank.
2. “We’re hoping that you just ignore the fine print and sign on the dotted line”
Fact: Always make sure you read the fine print. The fine print states important terms and conditions that need to be read in order to protect you.
On a side note, the Government Accountability Office (GAO) conducted an investigation to see whether banks fully disclosed all the necessary information for their customers and came to find that one-third of the banks surveyed didn’t provide the information and more than half did not display the information on their website either.
How to Fight Back: Read the fine print. Yes, we know that it’s such a tedious (not to mention boring and complex) document to read but keep in mind that that is how most banks get away with little charges because we fail to read the terms of our own contract. If there’s absolutely anything you are uncertain about, be sure to ask the bank representative before officially signing the document.
3. “YOU had better ask us for special bank promotions.”
Fact: While banks may be having special checking account promotions with higher interest rates that can benefit you, they may not always tell you about it unless you ask. A bank will not always outright tell you that they have a special promotion going on if you are already settling for a lower interest banking account with them. The only person losing out on not asking is you.
How to Fight Back: Banks need your business so why not ask to see if they have any special promotions that could help you out. If not, shop around for another bank that will give you better interest rates.
4. “We will sell your personal information”
Fact: Banks will attempt to convince you that they’ll respect your privacy, but they’ll still end up selling your information to their affiliates. Not only will they sell your information, but they’ll also most likely be sharing the most private and important information about you.
How to Fight Back: Call your bank and try to opt out of any policies where they will share your information.
5. “ATM withdrawals are costing you more than you think”
Fact: Those little quick trips to the ATM that result in service fees from anywhere between $1-$3 end up costing a lot more than just that. If you withdraw $20 from an ATM, you will be paying a potential 15 percent fee simply for convenience. Not only are you getting charged to use another provider’s ATM service, but your own bank may charge you a separate fee as well.
How to Fight Back: Save your money and instead opt for a cash back when using your debit card for most big convenience stores. Also, keep in mind that those ATM fees are even higher in cash-based places like casinos or bars.
6. “We make more money when you sign the receipt”
Fact: Many consumers may not be aware of the difference between using “debit” and entering a pin versus using “credit” and signing the receipt. When the consumer makes a purchase and uses debit as their method of payment, the retailer is charged less and therefore the bank does not profit as much because it is an electronic transaction. However, when the consumer opts to pay with “credit” and signs the receipt, the transaction goes through credit networks which in turn cost the retailer more money.
How to Fight Back: This is entirely up to you. Who do you like more — the retailer or your bank?
7. “We can take your money if you owe us”
Fact: If you owe the bank money for any late fees or overdraft fees, they have the right to automatically pay themselves back once you make your next deposit. Not only that but if you have several accounts and one account happens to have a zero balance, the bank may take money from your joint accounts to cover the deficit for the money you owe them.
How to Fight Back: Certain states have different laws regarding the “Right of Offset” to protect banking customers so do some research on your bank’s policies. Make sure you are always kept up to date on your accounts so that this won’t happen.
8. “You could be making more money elsewhere”
Fact: It’s no surprise that big banking branches don’t offer the best interest rates when it comes to their customers. Traditional savings accounts generate somewhere around .5% interest, which means you are missing out on higher yield interest accounts elsewhere.
How to Fight Back: Give your local banks a chance or even online banks. Always look for the best rates in your area so that you may receive the highest returns for your money.
9. “Bigger banks are not always better”
Fact: Statistics have shown that smaller banks tend to give their customers higher interest rates as opposed to bigger bank branches. Robert Johnson who works with the Roosevelt Institute has started a “Move your Money” campaign to urge people to transfer their money to smaller, local banks. Johnson says, “Taking money away from people who pay you zero, charge you 30 percent on your credit cards, hit you with all kinds of overdraft fees, and use that money to do, say, proprietary trading and pay themselves big bonuses and spend $400 million on lobbying — why would you want to empower those people?”
How to Fight Back: Be sure to check the minimum deposit rate necessary for you to receive the high interest rate offers and also keep in mind the duration of the account’s high yield interest offer. If you’re looking for a more personal place to bank, a local bank might be more suitable for you.
10. “Your online account information is not as up to date as you’d like to think”
Fact: Banks do not update your account information as often as you think and it certainly isn’t immediate so your account may not necessarily show the most accurate balance. This can get risky when using your debit card before the funds are actually deposited into your checking account.
How to Fight Back: Always keep track of how much money you have in your accounts and do not rely on the pending transactions you make that day to get you through.
Dealing with banks is never an easy task, but ultimately it will be up to you to manage your own finances. Always look toward ways to grow your finances. We hope to save you some time and trouble by keeping these tips in mind.