Bank charges you didn’t know about

Had a close look at your bank or credit-card statement lately? There may be charges levied by your bank that missed your eye.

Here’s a list of the unusual charges that banks levy, which may have missed your eye.

Writing out cheques frequently to pay for everything from rent to electricity? That means running through many chequebooks through the year. But banks have set a ceiling on the number of cheque leaves they issue in a year. Cheques availed of from the bank over this limit could attract a fee. For example, if you bank with SBI, you’re entitled to 50 free cheque leaves every year, after which you are charged ₹2 per leaf for additional cheque books.

The charges could rise in the coming years as the RBI has directed banks to discourage cheque usage and promote electronic payment. So, make use of online payment facilities such as NEFT to eliminate these additional charges.

It’s the eleventh hour to pay your credit card dues. Paying by cheque means an additional couple of days until the cheque is realised and your payment is actually through. So, you end up paying by cash for immediate settlement to avoid late fees.

But in doing so, you’re attracting a fee levied by your card company on cash payment, though their logic for this is hazy. For example, HDFC Bank stipulates that payment of credit card bills in cash will entail an additional ₹100 charge toward processing costs. So, drop off your cheques well in advance, or use an instant payment facility to conclude the transaction immediately.

If you exceed your credit limit, unknowingly or otherwise, you are charged an overdrawal fee.

This fee is normally a percentage of the overdrawn amount, subject to a maximum or minimum limit. Some banks levy a charge equivalent to a percentage of the overdrawn amount; for example, ICICI Bank levies a 2.5 per cent fee, subject to a maximum of ₹500. This type of situation can occur quite easily if you’re on a foreign vacation.

Banks like HDFC impose an additional 10 per cent fee on all transactions conducted in foreign currency, making it hard to keep an exact tab on whether you’re within your spending limits. So, minimise your card usage when you fear that you’re nearing your limit.

Still on the subject of credit cards, there’s a good reason not to transfer your existing balance on a bloated credit card to another card with more breathing room. That’s a balance transfer fee.

Switching to a card carrying lower interest might seem like a good idea, but you should carefully read the fine-print before jumping ship.

Often, there is a fee attached to such a move, which could be as high as 4 per cent of the sum transferred. This amount may turn out to be even more than the interest you would have paid in the first place.

Setting up a bank account just to put away money for the rainy day sounds like a good idea, except you could be penalised for not operating it.

Banks impose a non-operative account penalty. For example, Barclays charges ₹250 (plus service tax). The period of time before an account is declared dormant varies across banks.

Some charges are entirely unavoidable and you simply have to put up with it.

One such is the fees banks charge for sending you alerts via email or SMS every time a transaction is made. Canara Bank, for instance, charges ₹60/year.

Since having this facility is desirable as it adds security to your bank account, you should just treat this as an unavoidable expense. Note that some lenders such as Citi Bank provide this facility free of charge to their customers.

Similarly, the service charge on NEFT and RTGS transactions using your online banking facility is also a necessary evil, as the convenience of these payment options outweighs the small charge that you will be saddled with.

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