Introduction
Today, most people use services like bank account, debit card, credit card, online banking more. But, many people are unaware of some hidden charges. These include monthly minimum balance charge, ATM withdrawal charge, SMS alert charge, card replacement fee, etc.
Although these charges are charged in small amounts every month or year, they turn into a large amount in the long run. Many people lose their money unnecessarily because they do not pay attention to this.
In this post, we are going to see what are the important hidden charges levied by banks in India and how to avoid them. If you take small precautions, you can protect your hard-earned money from being lost unnecessarily.
Understanding Hidden Bank Charges
When we have a savings account or current account in a bank, many services come with it. But for some of these services, banks do not directly charge fees, but indirectly charge fees. This is called hidden bank charges.
For example, if you exceed the free withdrawal limit set per month at an ATM, an additional withdrawal charge will be charged. Similarly, if you do not maintain a minimum balance in the account, a penalty will be imposed every month. Some banks also charge a fee for SMS alert, online transaction or card replacement.
Since many people do not pay attention to these hidden charges, thousands of money are spent every year. Everyone who uses a bank account should know how these charges are charged and how to avoid them. Only by understanding this can we control unnecessary expenses.
Minimum Balance and Penalty Charges
Many banks require their savings account or current account holders to maintain a certain minimum balance. This means that you must always have at least that amount in your account.
For example, some banks require you to maintain a minimum balance of ₹5,000 – ₹10,000 every month. If it is less than that amount, the bank will directly charge a penalty charge. Since this penalty is charged every month, it becomes a big burden in the long run.
Many people do not even pay attention to how much minimum balance they should maintain in their account. Due to this, they end up losing money unnecessarily.
👉 To avoid this, first know what the minimum balance requirement is of the bank in which you have an account. If it is not suitable for your use, it is better to choose options like zero balance account.
ATM and Transaction Charges
Today, most people withdraw money through ATM cards or debit cards. However, banks only allow a limited number of free ATM transactions per month. For example, there may be a limit of 5 free withdrawals at the same bank’s ATM and 3 free withdrawals at the ATM of another bank.
If this limit is exceeded, a withdrawal charge and sometimes additional GST will be charged each time. Similarly, even small transactions like balance check, mini statement will be deducted from the account as a fee if the free limit is exceeded.
Similarly, online fund transfer (IMPS, NEFT, RTGS etc.) may incur transaction charges if some banks exceed a certain limit.
👉 To avoid this, find out how many free ATM transactions your bank offers and try to use it within that limit. If you need to withdraw money frequently, using digital payment apps or UPI will be a cost-effective way.
Debit and Credit Card Related Charges
Debit cards and credit cards have become everyday tools in everyone’s life today. However, many people overlook the fact that they also have some hidden charges.
For example, some banks charge an annual fee or renewal fee every year. Similarly, if you only pay the minimum amount on a credit card, high interest will be charged on the remaining amount. In addition, late payment charges, cash withdrawal charges, card replacement fees, etc. can also become a heavy burden.
Some banks also have an annual maintenance charge for debit cards. Also, if you use the card abroad, additional forex transaction charges will be charged.
👉 To avoid this, you should find out from the bank what charges apply to your card. It is very important for credit card users to pay the full amount on time every month. When choosing a debit card, you can choose cards with low maintenance fees.
SMS, Alert, and Statement Charges
Whenever we make any transaction, the bank will send an SMS alert immediately. This helps us to stay safe and to know what is happening in the account immediately. However, some banks charge a small monthly or annual fee for this SMS service.
Similarly, some people still request paper statements. For this, banks also charge separate charges for each statement. Sometimes, even when email statements are available for free, people choose paper statements out of habit, resulting in unnecessary expenses.
👉 To avoid this, you can use email alerts or mobile banking app notifications instead of SMS alerts. Similarly, if you choose e-statement (statement via email), you will not need to pay additional charges.
Loan and EMI Hidden Charges
Many people use personal loans, home loans, car loans or EMI facilities. However, you should be aware that banks charge some hidden charges without telling you directly when taking a loan.
For example, processing fees, documentation charges, prepayment charges, late payment penalties, etc. are more common during the loan process. In particular, if you pay the EMI late, additional penalties and high interest will be charged.
Also, when many people want to do pre-closure or prepayment, banks also charge separate charges for it. Therefore, even if the loan is completed quickly, there is a possibility of unnecessary additional costs.
👉 To avoid this, you should read and understand its terms and conditions completely before taking a loan. Make sure that you never miss the EMI payment date. Also, it is better to choose loan schemes that offer zero prepayment charges.
Tips to Avoid Hidden Charges
We cannot completely avoid hidden charges charged by banks. However, by taking some precautions, these costs can be reduced to a minimum.
Know the account rules – When you have an account with your bank, be clear about the minimum balance requirement, ATM withdrawal limit, transaction charges, etc.
Choose a zero balance account – If you cannot keep a large amount of money frequently, a zero balance account is a good choice for you.
Plan your ATM transactions – Try to withdraw money without exceeding the free ATM withdrawal limit. Do not check your balance frequently unnecessarily.
Use digital payments – You can avoid additional charges by using UPI, mobile wallet, net banking, etc. for small transactions.
Use credit cards responsibly – Pay your credit card bill in full and on time. You can avoid late payment and interest charges.
Use e-statement & alerts – You can reduce unnecessary charges by using email alerts and e-statement instead of SMS alerts.
Read the loan terms carefully – before taking any loan, be aware of the processing fees, prepayment charges, penalties, etc. before making a decision.
Conclusion
Today, services like bank account, debit card, credit card, loan, online banking have become essential for each of us. However, most of us are not careful about the hidden charges that occur when using these. Due to this, small amounts are deducted every month without knowing it.
These charges may seem small to many. But when you add them up over the year, they add up to a large amount. Therefore, it is very important to understand the bank’s minimum balance, ATM withdrawal limit, loan processing fee, card charges, etc. well.
👉 These costs can be easily reduced by changing some small habits. For example, keeping a zero balance account, using digital payments more, paying credit card bills on time, choosing e-statement instead of paper statement, etc.
If we are a little careful when using banking services, we can avoid unnecessary expenses and protect our money.
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