Don’t Let Banks Rob You

The other day, I saw some people complaining on TV about how banks are charging a lot of fees. A few years ago, netbanking was totally free, but now some banks are charging 30 cents to 50 cents for any online transaction whether you are paying bills or transferring from one account to the other. Their excuse is they have invested so much for more secure Internet banking. But I don’t think they need to charge customers more. They must be saving more money now because of online banking, since they can reduce the staff numbers. If you don’t believe me, look at the long queue at the banks. Whenever I go to any National or Commonwealth Bank, there will always be a long queue served by only 2 tellers. If they are always thinking about a better service, why don’t they employ enough tellers?

Since banking became an essential part of our daily life, those nasty banks have kept increasing all the fees and charges. Most of the banks in Australia offer very low interest rates for savings accounts (CBA & NAB offer 0.01% per annum interest). I’ve never earned more than 50 cents from those banks in any quarter when I had been their customer. To make matters worse, they charge hefty monthly account fees (more than $5 a month) plus transaction fees if you make more transactions than a certain number allowed, which most of the time is not enough. If you’re living in a country where you don’t have to pay such fees to banks, good on you. Don’t forget that you let them keep your money for “next-to-nothing” interest and you have to pay for withdrawing your own money!!! If you let $1000 sit in a savings account for the whole year without any transaction, what do you think will happen? It’ll surely be less than $1000 at the end of the year, since you’ll have to pay monthly fees.

No wonder National Australia Bank achieved 30% profit rise while Commonwealth Bank exceeded their profit forecast $3.65 billions. These greedy CEO’s and executives rip innocent customers off so that so that each CEO could take millions home as bonuses if the banks’ profits increase. In fact, the consumers have to pay for all those ridiculous bonuses and record-breaking salaries of CEOs’.

If you do not want the banks to rob your hard-earned money, here are some of the ways I learnt from my experience.

1. Do your homework and shop around

Just because you've been with the current bank for so many years doesn't mean you'll have to stick with them. If you don't know about the products being offered by other banks and financial institutions, chances are you may not be getting the best deal you should get. So spare some time to research about the charges & interests offered by different banks ,and "shop around" (it's a magic word for any customer).

My story - I did my homework and found out that my National & Commonwealth savings accounts were costing me instead of paying me, while other banks such as HSBC, ING Direct, Citibank offer more than 4.5% a year without any fees. Of course they do have some conditions about fees & interests. I'll discuss about them shortly.

2. Know how you need to use your bank account

Different people have different needs. Some just need to withdraw only 1 or 2 times a moth, whereas others may need 15+ withdrawls a month. Some prefer electronic Banking such as ATM, others rely mostly on online banking. Or some people might need cheque facility. So check your needs and choose the most suitable product for yourself.

My story - I mostly use online banking for paying bills and transferring money. But I would need to withdraw from ATM or EFTPOS 2 or 3 times a month. This account has to be my main transaction account & I would like a good interest too if possible. After a few days research, I found HSBC had 1 account that suited me perfectly. They offer 4.75% interest whenever you have more than $2000 in the account, free unlimited online banking in Australia, free unlimited number of withdrawls at HSBC ATMs, and 5 free withdrawls at non-HSBC ATMs. So I closed all my accounts with other banks and joined HSBC. Since then, not only I haven't had to pay any more monthly fees or transaction fees, but I also earn monthly interest that's not a joke like 50 cents for 3 months when I was with CBA.

3. Use your precious transaction quotas well

Every time you shop at supermarkets & post offices, use EFTPOS and withdraw some cash too instead of withdrawing later at ATMs. Even if there are any charges for electronic transactions, EFTPOS is cheaper than ATM to use. Some banks offer more free quota for EFTPOS than for ATM.

4. Keep an eye on your bills

Paying your bills on time will give you a good credit rating as well as will help you avoid late payment fees, which often are quite significant. If you don't want to forget to pay your bills, you can set up direct debit from your savings account and the money will be deducted from your account automatically. But you still need to make sure you have enough money in your account for those direct debits. If the money is deducted and you don't have enough balance, you'll have to pay "dishonour fees" that may range from $10 to $45 per item.

To sum up, banks are greedier than ever and they want your money. So if you're not careful, you may end up paying massive amount of fees, and you'll lose twice; once for not earning the interest you should be earning and another for having to pay the unnessary fees. The only thing we can do to defend ourselves against those big banks is to shop around and reward ourselves with the best deal we deserve.

Now I would love to hear what you think and what you have been doing to fight against big banks. If you live in countries other than Australia, please feel free to let me know about the situation in your country.