What are banks not telling you? Why should you deal with more than one bank?

The all mighty dollar and the bank account.  Almost everyone has one, but what are the things you may want to know…about banks in general?

Best rate – The bank will show you their products only. The competition may offer a better interest rate, a better mortgage rate or higher yielding investments. It pays to comparison shop.

High Interest Savings Accounts/ Very low mortgage rates – Sound too good to be true? Beware of teaser rates. These rates may only be valid for a few months. Then you can end up paying a higher interest rate on a mortgage and/or earning less interest on your bank account over the longer term. 

Commissions – The bank is there to sell you their products. It is always a good time to invest no matter what the stock market is doing.  Ever wonder why they keep suggesting to purchase their new mutual fund, certain types of investments, etc.  Higher commissions bottom line. What! You didn’t know your financial advisor gets a commission?  It’s not like they want to reveal that information to you, because you may think they are not looking after your best interests if you know they are making commissions off of your investments.

Banking fees – Only seem to keep increasing.  Mistakes are common. Complain, point out mistakes, say the fees are unreasonable, many times they will reverse the fees to keep your business.

Fine Print – Banks never explain the fine print in detail.  Make sure you know what you are signing and the liabilities, fees, etc. associated with it.  Leave your pride at the doorstep, ask questions, don’t assume anything.

Online Accounts – These accounts may not be suitable for everyone, as some online transactions may take longer to process, like an out of town cheque, etc.  Plus, they not as secure as the bank makes them out to be. Usually, banks will offer you higher interest rate if you open one of these online accounts.  Read the fine print, ask about transaction clearing times, find out if the account is right for you.

Mistakes – Banks are not immune from making any kind of mistakes, not depositing your pay cheque in the right account, withdrawing the wrong automatic payment amount, etc. Someone else may have the same bank account number as you with a different transit number (different city).  If the person moves to your area, vacations/visits your area, mistakes can be made in your bank account.  Check your accounts over on a regular basis.

Credit cards – Once again the banks will only offer you their products. The competition may offer better reward programs, interest rates, etc.

ATM’s – Ever wonder why you are starting to see so many generic ATM’s now?  It’s all about the money making opportunity in the fees. Also, if you need to withdraw cash while you are on vacation, not all banks are created equal when it comes to foreign transaction fees.

Identity Theft – Banks don’t advertise their problems with identity theft. Use only one bank?  Probably not a good idea in this age of identity theft.  Because an identity thief ruins your credit rating, you will not be able to go out and open up an account at a totally different bank to resolve an identity theft problem. 

Remember…

To shop around.  Just because you have been dealing with the same bank since you were 12, it doesn’t mean the bank is offering you the best interest rates, best banking fees or the best of anything.  

Try not to be fooled by fancy advertising. Sometimes this is more about increasing the banks business in general and good PR. Offers might not be as rosy as they appear. 

Deal with more than one bank to protect yourself in the event of possible identity theft. 

Always read the fine print, don’t assume anything.  Ask questions, forget about how dumb you think your questions may be. Better to understand the liabilities/risks rather than having to deal with unexpected financial surprises in the future.

Check your accounts over for possible errors on a regular basis.

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1 Comment (+add yours?)

  1. coconews
    Nov 20, 2008 @ 12:25:17

    Speaking of major banking mistakes. Many years ago I dealt with BMO Mastercard. Instead of crediting my account with the payment, they debited the account with the same amount and listed my card as stolen.

    Security at a major department store surrounded me because they thought I was a thief due to Mastercard’s data entry error.

    Someone else I know didn’t access their bank account for 3 months, there was numerous withdrawals and deposits in it that they didn’t make. Turns out someone who had the same account number in another city moved to the area and the bank failed to verify the transit number or name on the account. It took several months to clear up the problem, because the tellers kept making mistakes.

    Have you had any problems with banks? Anything else we should be aware of? Tell us about them.

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