ATM :: Stealing from your wallet? 7 entrapments from banks that you should be aware of


By Sangita Mehta, ET Bureau | 13 May, 2015, 10.48AM IST | Economic Times

ATM

A bank’s facilities typically come loaded. For the unsuspecting customer, it could just be a question of filling out a fixed deposit form or being granted a home loan. But there are some entrapments the bank will slip in that you need to be aware of, says Sangita Mehta.

HOME LOAN: Double Trouble

Watch out: When you apply for a home loan, the bank will sell you property insurance — which covers damage to property — and mortgage protection term insurance, which covers the loan in the event of the borrower’s death

What you should know: The housing society may already have property insurance. You don’t have to opt for an insurer the bank has a tie-up with. Ensure the premium is not clubbed with the loan, in which case, you will have to pay interest

CREDIT CARD: Take it or Leave it

Watch out: Banks often sell credit cards with the promise that for the first year, they will not charge any fee and the customer can discontinue it from the second year. However, at the end of the second year, the card company sends an innocuous mail stating they will renew the card for a fee unless the customer explicitly rejects it.

What you should know: The Reserve Bank of India has banned banks from giving such negative options. Customers should ideally use the credit card of a bank they do not have a savings bank with. In case of a dispute, banks often debit money from the borrower’s account

DEPOSITS: Auto Route

Watch out: When you’re opening a fixed deposit, watch out for ‘auto renewal’ in the fine print

What you should know: If you do not opt for auto renewal, the money is transferred to the savings account after maturity, where the bank offers about 4% interest as against 7-9% on FDs. You may forget to renew the deposit and the bank won’t remind you. When you tick that ‘auto renewal’ box, the bank cannot charge you a penalty on premature withdrawal of the deposit

ATM, CYBER FRAUD: Cry ‘Thief’

Watch out: If you find a fraudulent transaction in your account, immediately notify the bank

What you should know: If you are the unfortunate victim of an ATM or e-transaction fraud, watch out: the bank is liable to prove its innocence. If the bank is not notified, the maximum loss to you is `10,000 Postnotifi cation, the customer is not liable to bear any cost

LOCKER FACILITY: Keep your Freedom

Watch out: Banks put a price tag on a ‘scarce’ commodity like the bank locker

What you should know: Your bank may ask you to invest in fi xed deposits or mutual funds or even third party insurance, with the bank locker, even though they are not allowed to to do so by the RBI. You anyway need to pay an annual rental

PERSONAL LOANS: Don’t Rush to Pre-pay

Watch out: Banks have stiff conditions on prepayment of personal loans

What you should know: The RBI has mandated banks to not charge a penalty for pre-payment of a home loan if the interest is on a floating rate. But the rule does not apply for other personal loans. Some banks charge as much as 5-10% on pre-payment of loans. Some banks don’t even permit you to repay the loan for the fi rst six months or one year

PROCESSING FEES: No Free Lunches

Watch out for: For every home loan, auto loan and personal loan, banks charge a processing fee, which can be steep

What you should know: This fee is mostly at the discretion of the bank and can be as high as 1 percentage point, which itself will infl ate your outgo. If any bank says they have a lower rate, ensure the processing fee is also low.

Source : http://goo.gl/r0S6eK

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