Secrets your bank doesn't want you to know

Banks charge clients for a plethora of services to recover their costs. And it is not a recent phenomenon. There are charges for PIN generation, demand draft, duplicate bank statement, and even account balance updates that you get via SMS on your phone.

Here are some common bank charges that we all should know about.

1) Cash Transactions

You cannot do unlimited cash transactions from your bank account. There is a cost to it and banks charge you for that. For example, SBI Bank allows just three free cash transactions per month and thereafter charges Rs 50 per transaction. The charges were introduced last year by the bank.

Similarly, India's biggest private sector bank, ICICI Bank, reintroduced cash transaction charges post demonetisation at branches from January 1, 2017.

There are no charges for first four transactions in a month at branches in the same city. Thereafter, Rs 5 per Rs 1,000 is charged.

2) Non-maintenance charges

Non-maintenance charges have always been a point of dispute between a customer and a bank. It is always advisable to ask your banker at the time of opening an account about the minimum balance required.

For example, HDFC Bank charges Rs 600 if the minimum balance (Rs10,000) falls below Rs 2,500. If the balance is between Rs 7,500 and Rs 10,000, the penalty is Rs 150.

SBI recently brought back the penalty for failure to maintain the monthly average balance (MAB) in metro, urban and rural centres. In a metro city, failure to keep the Rs 5,000 balance will attract a Rs 50 charge if the shortfall is 50 per cent, Rs 75 if the shortfall is 50-75 per cent and Rs 100 if the shortfall is 75 per cent or more.

Different types of accounts have different minimum balances. So, while opening any account, ask the bank about the minimum balance for your account and the penalty for not maintaining it.

Banks calculate the MAB by adding daily closing account balance and dividing by the number of days in the period. Considering the method involved you might meet the minimum balance limit just by keeping your salary for a few days in your bank account.

3) Home branch and non home-branch transactionsThough the banking industry has adopted core banking, several banks still distinguish between home and non home-branch transactions. Large transactions are generally not encouraged at non-home branches  and therefore charges are levied on them.

For instance, HDFC Bank has capped the amount that can be transacted in the home branch at Rs 2 lakh. Above Rs 2 lakh, it charges Rs 5 per Rs 1,000.

At non-home branches, there is a cap of Rs 25,000; above this, customers are charged Rs 5 per Rs 1,000, subject to a minimum charge of Rs 150.

It is always good to shift your bank account to the place you reside so that there is less cost to the transaction

4) ATM transactionsYou cannot make unlimited cash transactions from your ATM. There is a limit to it. According to RBI rules from your own ATM you can make at least first five transactions in a month free. From other ATMs you can make three free transactions per month in six metro cities and five in other cities.

Banks charge Rs 20 per financial transaction and Rs 9.55, including tax, for every non-financial one beyond this limit.

5) International TransactionsIf you make payments abroad through debit or credit card, a charge of 3-4 per cent is added to the exchange rate. So, before swiping the cost abroad, add 3-4 per cent extra cost on the transaction amount.

Next time when you do any banking transaction do keep the above-mentioned charges in mind.


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