Are you the kind of person that has total confidence in your banker and who signs, without reading, everything that’s put in front of you? If so, this article is for you! Here are 15 secrets your bank will likely never tell you, but that can make you a better consumer. Caveat emptor—buyer beware—always applies, even in the banking world.
Not all borrowers get the advertised rate
If you want to get a personal loan, beware of the bank’s advertised rates. If you don’t have a good credit report, you might not get the advertised rate and will have to settle for a higher one.
Some insurance is useless
If you got a credit card from your bank, your banker may have offered you different kinds of insurance. According to experts, however, some insurance products are totally useless. This is especially true for credit balance insurance, which is very expensive and comes with a multitude of exclusions.
Post-dated cheques aren’t foolproof
A post-dated cheque is far from being a sure thing. Some customers were surprised to find that their bank processed a cheque before the date written on it, resulting penalties due to a lack of funds in their account.
Generally, banks agree to refund their clients’ money and cancel the cheque, but it’s not always easy to get them to see it your way. You’ll probably have to spend a lot of time on the phone trying to explain the situation to your bank.
Bank employees have targets to reach
Think your banker is your best friend? Think again! They have daily, sometimes even hourly, targets to reach. The pressure to hit these targets can force some employees to offer their clients products they don’t necessarily need.
Businesses also have to pay fees when you use your debit card
You aren’t the only one paying fees when you pay with your debit card—the business you’re buying from does as well. The fees vary regionally throughout the world, usually a few cents per transaction.
Bank employees are seriously stressed
A CBC investigation into employees at Canada’s five big banks found that some employees were so stressed about reaching their sales targets that they had to go on medical leave. Others suffered from insomnia, anxiety, and depression.
Canadian bankers aren’t the only ones in this situation. Similar situations have been reported in the United States.
Your bank may not be the best place to invest your money
Your bank isn’t always the best place to invest your money. Bankers often can’t offer all the savings and investment products available on the market. In other words, there might be a better product for your situation, but your banker would be unable to offer it to you.
Bankers work for their bank—not you
With massive quarterly earnings and senior management freely admitting that their business objective is to increase value for their shareholders, it’s clear that banks care more about their own interests than those of their clients. They want to make sure they’re getting the most from you at each interaction, often selling you unnecessary products or services.
By the end of your mortgage, you will have paid a huge amount of interest
When you get a mortgage, your bank is making money. Along with having to repay your mortgage, you have to pay a significant amount of interest. For instance, a $250,000 mortgage amortized over 25 years at a 4% interest rate will cost you $395,877.36.
Selling your home? You might have to pay a penalty
Have you decided to sell your home? Congratulations! You may have to pay a penalty, however, sometimes in the thousands of dollars, to your bank because you broke your mortgage. Unfortunately, not everyone knows about this practice.
Mortgage insurance might not be the best option
Did your banker offer you life insurance with your mortgage? By accepting their offer, you may save time, but your portfolio might not grow. You might have been able to get a better product from a mortgage broker or an insurance company, who could have offered you products that are more suited to your needs, but that’s not something your banker would mention.
Bankers aren’t always honest
Data theft, fraudulent transfers, fake debit cards—these crimes are becoming increasingly common among bank employees, according to Brenda Fischer, chief of the Cybercrime and Identity Theft Bureau for the Manhattan district attorney’s office. The problem is that many bank employees receive low wages, encouraging them to commit illegal acts.
Using your debit card while travelling can be costly
Would you rather wait to get to your international destination before getting money from an ATM? Be careful—this can be very expensive. Even ATMs that are advertised as free usually aren’t. They often have a significantly higher exchange rate than your credit card.
Your bank can freeze your assets without telling you
If you didn’t read the small print when you opened your bank account, you probably should have. Banks generally have the power to freeze your account or, in some cases, close it. They aren’t even required to give you notice.
No credit history is not necessarily a good idea
Terrified of credit cards? Always pay in cash? Despite being a great way to avoid debt, this practice might actually damage your credit report. To build a good credit score, you have to take on debt—and pay it back on time!
Philippe Michaud, Espresso
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