Top 10 Dirty Secrets Banks Don't Want You To Know



Top 10 Dirty Secrets Banks Don't Want You To Know

VOICE OVER: Peter DeGiglio WRITTEN BY: George Pacheco
The big banks have a lot of skeletons in their closets. For this list, we'll be ranking the secrets and tips the banking industry prefers that you not know. Our countdown includes Banks Can Re-Order Your Transactions, Banks Are Open to Negotiation, A Little Debt Can Sometimes Be Useful, and more!

Top 10 Dirty Bank Secrets

Welcome to WatchMojo, and today we're counting down our picks for the Top 10 Dirty Bank Secrets.

For this list, we'll be ranking the secrets and tips the banking industry prefers that you not know.

Do you know anything we missed? Spill the beans down in the comments!

#10: Don't Bet on Certain Insurance Products

Hey, we get it: taking out a loan or line of credit with a bank can be a scary proposition. Oftentimes, a bank will offer up insurance on these financial products, framing it as a safety net of sorts in case you fall on hard times and have difficulty paying back your debt. Unfortunately, there are occasional exceptions to these insurance plans that involve reading some very fine print. These exceptions are rarely in favor of the borrower, meaning that the bank can collect on a portion of your debt, even if you paid for an insurance plan. So be sure to take all the time you need with that contract before you sign up.

#9: Banks Can Re-Order Your Transactions

Balancing a checkbook can be complicated if you're someone with a lot of transactions. If you're someone who doesn't keep a lot of cash in your account, the order of your purchases and deposits can absolutely make the difference between your account being in the black or slipping into the red. Some banks can order your daily transactions by their amount, rather than the order in which they occurred, meaning that you could become overdrawn by accident. Furthermore, some institutions may run your deposits after your purchases, or take a while to factor in that cheque, meaning that you may incur overdraft fees at the worst possible time.

#8: A Little Debt Can Sometimes Be Useful

Banks make money off lending and debt. But you don’t have to take on a lot of debt in your life. After all, getting yourself into mountains of debt is not a good idea. However, having absolutely NO debt history can be just as detrimental, especially when attempting to convince a bank to lend to you. It's important from their end to know that you're a trustworthy individual who has a history of paying back debt. A good idea for young borrowers is to start small with a store card at a place where you do a lot of shopping, preferably one with a low credit line. That way you can build a little credit without worrying about getting in over your head with debt.

#7: Cash Is King

Have you ever been to a restaurant or store that ONLY takes cash? It may seem to be an odd choice in the modern day, but there's a very rational reason behind it. Businesses get charged for every swipe of a credit or debit card, (often including refund swipes and even miss-swipes), so you can understand why they'd just rather not deal with that sort of cash bleed. On the other hand, some banks or credit unions also charge their members a fee when they swipe their cards as debit rather than credit. It's usually something small like a quarter, but it's still a wise move to read the fine print and make sure this isn't something that affects your account.

#6: Let Your Bank Know When You Travel

Most of us love to travel, and oftentimes the excitement of our upcoming trip can factor into forgetting something very important... like the subject of this entry. Be sure to let your bank or credit card company know in advance when you're planning to leave the country on vacation. Otherwise, be prepared to get hit with a LOT of fees for swiping your credit or debit cards while on foreign soil. Think of it sort of like roaming on a cell phone plan: it's SUPER expensive, and best to be avoided if you can do so at all costs. Either bring cash or give your bank a call and explore your options.

#5: Foreign Exchange Rates

Speaking of cash, the next entry on our list is something you should think about before and after any vacation into a foreign country. It may seem smart and convenient to exchange any of your own currency at a bank to the denomination of where you're going, but there are other options. Oftentimes, banks won't be offering you a very good deal when it comes to an exchange rate, not when there are specialists you can visit to get a smidge more for your money. Oh, and be sure to do this before returning home, too; there are usually plenty of options for tourists to do just this, regardless of destination.

#4: The Right of Set-off

The "right of set-off,” also known as a banker's lien, refers to when you have both a checking or savings account and a loan from that same bank. This could be a mortgage, business or personal loan and it basically means that the bank can take money from your savings or checking should you fail to make payments on your other loan. Now, any sort of big money loan should always be negotiated in good faith, but sometimes things happen, and we can't make those monthly payments. This is where the “right of set-off” comes in. Transferring your funds into another bank could delay this, but only as long as it takes for the bank to come at you by other be aware.

#3: Credit Over Debit

No one likes to talk about fraud, but unfortunately it's a growing concern in today's digital world. Debit cards may be favored for speed and convenience, but it's paying by credit that gives you the most protection when it comes to fishy activity. When you use your credit card, you’re protected under the liability umbrella of the credit company, whereas when you use a card as debit, any fraudulent activity still results in your money being spent. Because those funds are gone, there's a smaller window for you to report any fraudulent activity. After this window closes, you may be held liable for more than you bargained for.

#2: Banks Are Open to Negotiation

Ok, so being overdrawn sucks, but did you know that you can contest that fee and get it reversed? The world of banking is sort of similar to the cellular market, in that there's a lot of competition. As a result, banks want to keep you as a customer, and are often willing to work things out when it comes to fees or contested charges. The same goes for credit card companies. Missed a monthly payment? Call them up and ask for a one-time forgiveness of the fee. Getting whacked with multiple overdraft charges? Maybe imply that you might take your business elsewhere. Credit APR rates are also on the table when it comes to negotiation, so try to get the best deal!

Before we name our number one pick, here are a few honorable mentions.

Don't Pay Off That Bill Early
For Certain Bills, Take Your Time, Lest You Be Charged a Fee

Closing Unwanted Cards
Banks Look at ‘Credit Utilization’ When Considering Loans

ATM Fees
Don't Withdraw Out of Your Network!

"Free" Is Relative
Checking Accounts Can Hide Hidden Fees

Bank Tellers Aren't Financial Experts
Consult a Specialist

#1: Fees, Fees, Fees

We’ll say it yet again: fees. Fees are a huge part of how banks actually make money from holding on to YOUR money. They're relying on you making a mistake now and then, and paying the price in fees, fees... and more fees. This is especially important when entering into any sort of big money bank loan, like a mortgage. Mortgage fees often lurk within the tiny print of the banking contract, so it's of the utmost importance to read all documents over and understand what you're getting into. The same goes for checking accounts. Make sure that "free account" doesn't whack you with any expensive maintenance fees every month, and you'll be a smart saver.