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Wednesday, January 13, 2010

Tips on how to cut your banking charges




In these times of financial uncertainty, when markets are down and jobs are scarce, cost cutting has become the buzzword. Let alone companies, even individuals are looking to cut costs by reducing outings, trips or lavish shopping.

Your savings bank account is another place where you can look to cut costs a lot of it.

Banks levy various charges on transactions ranging from Rs 25 to Rs 1,000. And if you haven't been careful about them, or are not aware of them, in all likelihood they have already burnt a hole in your pocket.

A few steps, however, could help you not repeat the same mistakes this New Year and help you save money. If you ignore them, you will have to pay, literally. 






While there is no limit to the number of accounts you can have, it could prove costly to maintain more than one.

Most banks have a minimum balance limit. So, if you have six accounts, you would have to maintain a balance in each of them.

If you don't, you will have to pay a penalty - Rs 750 in most cases. And, you will have to pay that every quarter. So, in a year, you would end up paying Rs 3,000 that, too, for only one account.

If you have more, do your own math to calculate the total losses. If you maintain the balance, you will earn only 3.5 per cent against the 8 per cent that you could earn from a Public Provident Fund, or more through other saving instruments.

That's not all. A few banks levy added transaction charges in case of non-maintenance of minimum balance. Moreover, if you do maintain the minimum balance somehow, but are not using the account, you will pay again because some banks charge an inoperative account fee.

By now, if you are convinced about closing those accounts you don't use or need, be prepared to pay account closing charges.

However, it is better to pay up this one-time charge to avoid future losses. This charge is only for accounts that are six months to a year old. 






Think twice before you write those cheques, it may be better to use cash instead.

Most banks do issue at least one cheque book (20-25 leaves) per quarter free of cost if you maintain minimum balance. Otherwise, you pay up. If you want to use more cheque leaves, you will have to pay for each of those.

Also, make sure you have adequate funds before issuing a cheque because a bounced cheque is costly, too.





If you do not maintain the minimum balance in your account, you will be liable to pay the penalty charges as well as other charges for various transactions

Penalty charges (per quarter)*

ICICI: Rs 750

HDFC: Rs 750

HSBC: Rs 750

Standard Chartered: Rs 750-1,500

State Bank of India (SBI): Rs 30-55

Kotak Mahindra Rs 150

Charges on transactions

Call To Customer Service (non-IVR)

HDFC: Rs 50 per call

ICICI: Rs 50 per call


Cash transactions at branch

ICICI: Rs 60 per transaction (first 3 transactions per quarter free)

HSBC: Rs 50 per transaction (first 2 transactions per quarter free)

Dormant account

SBI: Rs 30-50 per quarter

Standard Chartered: Rs 1,000 a year


Inoperative account

SBI: Rs 150 per quarter

HSBC: Rs 150 per quarter

Cheque charges

ICICI: Rs 5 per leaf SBI: Rs 2.50 per leaf
 





Too many transactions could cost you too, whether they are through ATMs, or over the Internet, or phonebanking, or at the branch. Only a limited number of banking transactions come free of cost per quarter for many banks.

In Standard Chartered, the first four transactions through any channel (Internet banking, phonebanking, ATM or branches) per month are free. However, it charges as high as Rs 75 per transaction, subsequently.

Some banks even charge for repeated visits to the bank branch.

If you pay your credit card bill through cash at a branch, you are fined.

Says a senior executive of a private sector bank: "We want to discourage customers from coming to the branch, hence the fine. The customers can pay the bill through an ATM transaction, which is free." Banks also charge additional fees for banking at a non-base bank.
 



Keeping fewer papers will not only help you save money, but help keep your documents file uncluttered. So, be content with your quarterly account statements and monthly email statements.

A physical monthly statement would cost you Rs 100-200 per year.

Banks even charge you for issuing interest and balance certificates in deposit accounts. A balance certificate gives the balance of a particular day and is used mostly for Visa purposes, while an interest certificate shows the total interest earned on bank deposits and is used at the time of filing income tax returns.

Usually one certificate is issued free of cost every year. Make sure you don't lose it and pay to get a new one. 
 



Closing an account

Kotak Mahindra Bank: Rs 600 (within 6 months)

HSBC: Rs 500 (within 6 months)

SBI: Rs 100 (within 1 year)

Urgent cheque issued over the counter

HSBC: Rs 50 per leaf


Payment of credit card bill in cash at branch

ICICI Bank: Rs 100

HDFC Bank: Rs 100

Duplicate statement

Standard Chartered: Rs 100

HDFC Bank: Rs 100 at the branch, Rs 50 through phone banking or ATM, Rs 30 over the Net, mobile banking, IVR

Replacement of ATM/debit card

ICICI Bank: Rs 200 per card

PNB: Rs 100 per card

PIN Regeneration Charges

PNB: Rs 25

ICICI Bank: Rs 25 (free if request through Instapin at branch or IVR customer care)

Duplicate passbook

HDFC Bank: Rs 100

ICICI Bank: Rs 100 (Rs 25 per page for updation)

Stop-payment charges

ICICI Bank: Rs 50 per cheque

HSBC: Rs 100 per request

Unarranged overdraft

HDFC Bank: Rs 100 per transaction plus 18 per cent interest per annum

Cheque returns

ICICI Bank: Rs 100 if a local cheque issued to customer is returned, Rs 300 if the cheque issued by the customer is returned and Rs 750 if the same cheque is redeposited by the customer and is returned again
 

Carelessness is no excuse, especially when you are banking. For instance, if you deposit cash in the cheque drop box, banks will fine you.

Private banks charge Rs 100, and if the deposit amount is over Rs 500, the fine is Rs 300. If you repeat instances of cash deposits in the cheque drop box, you would have to pay an additional Rs 500.

Regeneration of the PIN number of ATM or debit cards costs money in most banks. So, if you can't remember your number, note it down at a safe place. Even replacement of cards attracts a fee.

Subscribing to SMS alerts, bill payment, home banking, duplicate passbook, cheque status, unarranged overdraft, inter-branch transactions and cash delivery are only some of the services which are charged for.

You pay for every personalised service, such as SMS alerts, that you avail from your bank. So, make sure you really need these. And, do remember that there is no such thing as a free service.

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