Tuesday, September 17, 2013

Some smart banking tips

Recently my friend applied for a passport which warranted a year's statement of his bank account. He had to trek a couple of times to his bank and after some exchanges got the same one afternoon, with a statutory warning that suitable charges will be taken from his account and he nodded lamely for this Hobson's choice. But when he was deducted around Rs 600 for a six page statement, he lamented whether the bank could not even make a free statement for a customer who is patronizing the bank for many years.

While the bank charging the customer is correct or not is a moot point, a prudent customer can avoid such charges and also save himself from the leg work and foul temper that invariably accompany a branch visit for such purposes. Here are some personal banking tips:

1.  Most of the popular banks are offering Internet banking which comes with an option to download online statements for a maximum period of six months that could be saved in different formats. If one could , in a disciplined way, extract and save these statements every six months one can generate statements for any number of years, whenever required without paying a rupee.

2. Many banks are charging for cheque books beyond a certain number of leaves. This charge could be avoided by making online transfer between banks, wherever possible, which are free of charges up to a limit. Also, payment for utilities such as Electricity bills, credit card bills, Flat maintenance charges, Mobile charges etc., could be made through Internet banking and one can completely stay away from using cheque leaves at all.

3. Submit and update your KYC (Know Your Customer) form promptly and demand that every transaction on your account has to be reflected with a short message on your mobile. Though many banks are offering this service free of cost, it is even worth paying for this, so that you can keep track of your account and also ensure against any misuse.

4. Banks also charge for executing the 'Standing Instructions' by making payments from the customer's account periodically- say for payment to housing loan institutions, children school fees and monthly transfers to your different Recurring Deposits. These are no more required by the banks to be done at a charge as one can execute these from anywhere in the globe making use of Internet banking. For those who are too busy, they can make use of the many electronic reminder tools that are freely available.

5. Avail online access to your bank accounts and keep tracking the transactions. You may not me initiating any, but the bank could be making some debits, which are avoidable. In case you are away from your place and not operating the bank for a specified period of time, the bank will brand these as non-operative and also periodically deduct from charges. To avoid this, make some online transfer from one account to another. Note that even though there are credits to the accounts, some banks insists that debits  have to be made to be considered as 'operative', though this contention may not hold against the rule. But then who has the time to argue and so make a dummy debit and save some money.

6. If you have some fixed deposits whose yearly interest you are accounting for while filing your annual tax return, make sure that you not only leave necessary instructions but also get an acknowledgement and preserve the same. Despite the many good staff, still the banks are notorious for not updating your intention in the system, which you will realize only at the time of maturity of the FD with a reduced maturity value !

7. If you hold a Safe Deposit Locker, some precautions need to be exercised. Operate the locker at least once in a year, so that you can use the opportunity to pay the yearly rental for the same. Many banks provide a facility for putting your own lock in addition to the bank's inbuilt lock. Even if you are not interested in using this, please put a lock there, as by mistake some one else could lock yours instead of their locker- Believe me it has happened !!

In many such ways, you can save yourselves from some minor charges and more importantly a visit to the branch, which is what exactly the modern day banks are also expecting !!

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