All the Ways Your Bank Will Try to Steal From You
You probably think of your bank as a place to hide your money and it’s easy to forget that the bank is only too happy to accept it because they can use it to make more money. Basically, they do this by using your deposits for profitable investments, paying you a tiny interest rate for the privilege. But that’s not the only way they make a profit, and the bank will screw you up in no time if you let it happen. Here’s what you should pay attention to in order not to be deceived by your bank.
“Respectful Pay”
Sometimes your bank will send you a nice email informing you that they have added a “courtesy fee” or “overdraft tolerance” to your account. This means that if your account becomes overdrawn for some reason, instead of rejecting new transactions, the bank will cover them for you, thus saving you the embarrassment of having your debit card rejected at the grocery store or having your check returned for rent because of your salary. came up short.
Sounds nice, right? Except that the bank does not do this for free: it will charge you a fee for every single transaction after your account overdraws between $10 and $40, depending on your bank. If you don’t know your account is overdrawn, you could easily end up with hundreds of dollars in fees that you would have avoided if your card had been rejected the first time you tried using it. Overdraft protection can save lives, but you need to be aware of the consequences.
Reorder transactions
Speaking of overdraft fees, did you know that your bank has the discretion to “sequence” the transactions it processes? And that some banks will make sure to process your debits first if you have an overdraft, even if you have a large deposit in line that will put your account in the plus? Or, if you have a series of debits, it may decide to process the largest amount first , causing your account to go into overdraft mode earlier and thus incur additional fees. There are several lawsuits in the works against this practice, so it may disappear. But until that happens, know how your bank works.
Encouraging the use of debit
Banks are happy to provide you with a debit card to access your funds and often encourage its use in their advertisements. And it’s true, paying with a debit card instead of a credit card can keep you out of debt. But using your debit card in the wild can also put you at risk of being scammed. Simply put, credit card fraud protection is much stronger than debit card fraud protection. And if your debit card is compromised, you could be left on the hook with a much bigger financial loss than if you were paying with a loan.
Bait and switch rates
Banks often advertise high interest rates on savings accounts and low interest rates on loans, but these are almost always the top or bottom of the range, not the guaranteed rate. When you sit across from someone at the bank, you often find that this enticing rate is actually out of reach for you, leaving you with the choice of turning down a loan or account, or gritting your teeth and taking out a loan. offer to lure and replace.
Postponement of deposits
Your bank may, in its sole discretion, determine when deposits will be available in your account. While your bank will typically release the deposited funds to you within a business day or so, it may delay the disbursement of these funds for a variety of reasons . Your bank may say that it was worried that it would not be able to receive money from a depositor, that there was something unusual about the transaction, that your account was too new , or that you had too many deposits in a short period of time. time. What if these delays in your deposits bring your account into overdraft territory? Well, good luck getting those charges dropped.
Early repayment penalties
Did your bank gladly lend you some money or take out a mortgage on your home and now your financial situation has improved so you want to pay off the loan sooner than expected? Some banks may impose a prepayment penalty on you. To be fair, these fees will be listed on the loan agreement or mortgage papers, so you can only blame yourself if you haven’t noticed, but it’s a weird situation when you owe someone money and they get mad when you want to pay it back.
Unnecessary fees
Business loves “commission”. Your cable company charges you a bunch of fees for secrets, delivery apps charge you a bunch of fees every time you order a burrito, and your bank will bury you in fees . Minimum balance payments, overdraft fees, service fees, and ATM fees are bad enough. But banks often also increase their fees gradually over time , so that what was once an annoyance becomes a threat to your financial security. Banks love fees because they are legal, easy to disguise with legal language, and extremely profitable.
What to do with it
You may need a bank in your life, but be aware that these relationships can easily become abusive. What is your best strategy? Read the fine print and shop around. You can – and should – change banks if your current one is ruining you to death.