4 Banking Charges To Avoid

Sneha, a salaried professional, decided to open a Savings Bank account, besides her salary account. She thought this new account would help her save as this was not linked to her salary account. Sneha made a couple of deposits initially in this account,but didn’t operate this account for a long period of time after that.

A few months later, she received a notification from the bank stating that it had charged her account with a small fee – considered to be non-maintenance charges – as her account, which hadn’t been operated in a while, also had below the minimum required amount in it. She was completely unaware of such charges.

Has this happened to you as well? It’s always good to know about the basic charges that are payable by an individual to use certain banking services. Let’s spell them out for you. Here goes:

ATM Charges

According to the RBI’s new guidelines, Savings Bank account holders in metropolitan cities (Delhi, Kolkata, Bengaluru, Chennai, Mumbai and Hyderabad) can only enjoy three free monthly ATM transactions from ATMs of other banks and five from their home bank.

For any ATM transaction beyond this stipulated limit, a charge of Rs. 20 or more will be levied on the savings bank account.

However, people living in smaller cities and towns still continue to enjoy free five monthly ATM transactions from other banks. If they carry out more than five transactions in a month, they need to pay Rs. 20 for each cash withdrawal and Rs. 9 for non-cash transactions.

BankBazaar Tip: By using net banking and SMS services to know your bank account’s balance and for other non-financial transactions, rather than checking these at an ATM, you can save on these charges.

Additional Reading: ATM Usage And You

Cheque Bounce Charges

The two most common reasons for a bounced cheque are insufficient funds and signature mismatch. If your cheque bounces, you’ll need to cough up a penalty fee. The fee may vary from one bank to another, but generally, banks charge around Rs. 200-250 for every instance of a cheque bounce.

BankBazaar Tip: In order to avoid paying the penalty fee for a bounced cheque, it’s a no-brainer really. Just ensure that your cheque does not bounce by keeping sufficient funds in your account and making sure that your signature matches that on bank records.

Cheque Book Charges

A lot of us have the habit of making cheque payments for everything, so as to keep a tab on monthly expenses. While this is a good habit, do remember that chequebooks are free only up to a certain limit. If you order too many new cheque books to replenish your dwindling stock, you will end up paying extra for every new chequebook that’s issued under your name.

BankBazaar Tip: Unless you’ve been living under a rock, you should know that internet banking has become quick, safe and convenient. Use net banking to take care of money transfers, bill payments and more. Besides, misplacing a cheque will increase the risk of fraudulent activities in your bank account. Plus, by going paperless, you’re doing your little bit for the environment. More brownie points for you!

Additional Reading: Getting Started With Money Transfers

Credit Card Charges

A Credit Card is one of the most common and popular forms of plastic money, widely used by people across the globe. While using a Credit Card is efficient in many ways, you should also be aware of its hidden charges. There are many indirect charges, which you will end up paying if you don’t use your Credit Card wisely.

Withdrawing cash using your Credit Card incurs a charge, and also late payment of your monthly Credit Card bill can also result in high penalty charges.

BankBazaar Tip: These are two common charges which you can easily avoid when using a Credit Card. Avoid using your Credit Card to withdraw cash from an ATM and always pay your bill on time. Paying the entire amount due, rather than just the minimum amount, will also help you save on interest charges.

Additional Reading: Why Paying the Minimum Due on Credit Cards Is A Bad Idea

Non-Maintenance of Minimum Balance

Well, here’s some good news. The RBI has now said that banks cannot charge non-maintenance fees and make an account negative. Once an account hits zero balance, banks cannot levy charges on these accounts. If your bank levies such charges, you can write to the Banking Ombudsman.

Most banks require their customers to maintain a minimum balance in their savings bank accounts. Non-maintenance of this minimum balance could result in penalty charges. The penalty charges differ from one bank to other; usually, private banks charge more than PSU banks.

These small yet effective steps can help you avoid paying additional bucks to financial institutions on a monthly or yearly basis. You could soon end up saving a tidy sum.