10 Bank Fees You Can Legally Avoid
Ever wonder why there are still a lot of Pinoys who don’t open their bank accounts?
In January 2017, Bangko Sentral ng Pilipinas (BSP) shared a study that shows 86% of Filipino households don’t have bank accounts. That is more than half of the population.
When we think about our country’s modernization, most Filipinos are still not open to the idea of transacting with banks. Thus, 39.6% of Filipinos kept their savings at home, perhaps in coin banks.
It is typical for a Filipino not to open a bank account unless perceived as a serious need that their benefits outweigh their doubts.
BSP found out that 9% believe that the banks have high costs of maintenance, 9% do not like how banks treat them, and 17% of Filipinos do not trust banks. Technically, the bank is not robbing you. However, it has a lot of ways to earn money from you.
Credit Card Annual Fee
A credit card membership fee is usually from bank charges Philippines every year. Depending on the credit card category, it ranges from Php 1,000 to Php 4,500. Also, supplementary cards may have annual fees.
However, some banks charge annual fees in monthly installments. You must pay your membership fee to continue using your credit cards and enjoy their benefits, rewards, and rebates.
The more you use your credit cards, the higher the chance that the bank will waive your annual fee. However, this varies depending on the bank’s discretion.
How to Avoid Bank Fees:
Ask your credit card provider how to waive the annual fee.
Dormancy Fee Savings Account
Banks may impose service charges and maintenance fees on savings accounts, whether active or dormant.
However, this usually happens to dormant accounts. These are accounts that had no activities for the past 12 months. Also, a dormant savings account occurs if the account balance falls below the Minimum Monthly Average Daily Balance.
Take note that some banks collect this fee after two months of dormancy. On the other hand, some banks collect the fees after the 61st month it has become inactive. The Dormancy Fee usually costs Php 30 to Php 500 a month.
How to Avoid Bank Fees:
Deposit any amount every month or close the account if you think you can’t keep your account active.
Card Replacement Fee
Debt and credit cards sometimes get stolen, lost, or destroyed. For whatever reason, you have to pay for the replacement card. This usually costs between Php 110 to Php 400, depending on the credit or debit card type.
How to Avoid Bank Fees:
Always keep your card in a safe place. Do not bring it if you think you will not use it.
Overdraft Fee
The overdraft fee happens when the bank account withdrawal exceeds the available balance. Also, this applies if you charge more than your credit limit.
Some banks charge based on the overcharged amount, while others have fixed penalties. The minimum bank charges for the Philippines amount range from Php 26.25 to Php 500.
How to Avoid Bank Fees:
Take note of your bank account balance and your credit limit. Enroll in e-banking to easily monitor your saving and credit card accounts.
Over-the-Counter Withdrawal Fee
An additional fee is for services done over the counter. This may not make sense to most of us since visiting a bank and waiting in line is already inconvenient.
Nevertheless, the bank charges Philippines Over-the-Counter Withdrawal Fees based on the service rendered. Over-the-Counter fees occur when you withdraw a cash advance from your credit card or a savings or checking account.
While savings or checking accounts charge Php 30 per withdrawal, cash advance withdrawals over the counter are Php 300 to Php 500 apart from the service fee and interest.
How to Avoid Bank Fees:
As much as possible, do your transactions online.
Interest Charge
This is for online cash loan services and unpaid credit card balances. All legit online loans have interest depending on its term and principal amounts. Also, it may change depending on the bank’s policies.
Remember: Credit cards are not charged with any interest if the cardholder pays the balance on or before the bill’s due date.
How to Avoid Bank Fees:
Pay your credit card bills on time. Sometimes, banks lower the loans’ interest rates. This will depend on the credit score of the borrower. Ask the bank for their specific policies.
Late Payment Penalties
Banks charge late payment penalties on credit card holders if they fail to pay even the required minimum amount. This fee is apart from the interest charged on your current unpaid balance.
How to Avoid Bank Fees:
Settle your credit card bill as soon as possible, or pay at least the minimum amount as indicated.
Service Fee
Service, processing, or administrative fees are for your availed financial services. If you apply for an emergency loan Philippines, banks usually deduct the service fees from the principal amount of the loan.
How to Avoid Bank Fees:
There is no way around this fee; however, you lower the fee depending on the bank’s discretion.
0% Interest Installment Plans
Banks usually entice their credit card holders with grand offers like gadgets. Depending on the amount, these offers are payable within 3 – 24 months, with a 0% interest charge.
But of course, every good offer has a catch!
If you fail to pay your monthly installments on time, an outstanding interest rate will be charged on the remaining balance. Some banks make the whole balance due and demandable. This is the way banks earn more money from your mistake.
How to Avoid Bank Fees:
Meet the monthly payments if you plan to take this credit card feature.
Credit Card Cash Advance
A credit card cash advance is a feature that lets you withdraw cash from the bank’s ATM. Usually, you take out a cash advance of up to 50% of your credit limit.
How can the bank make money from cash advances? It has a service charge and an outstanding interest rate.
When you withdraw your cash, the service charge will be charged to your credit limit. Then, the outstanding interest rate will be charged from when you use the service until you settle it.
Take note that this interest charge is different from your credit card’s interest charge. The cash advance fee is usually 3% to 5% of the withdrawn amount, while the outstanding cash advance interest charge ranges from 3% to 3.75% a month.
How to Avoid Bank Fees:
If you do not need cash, it is best not to use this service.
Foreign Transaction Fee
When you charge in foreign currencies on your credit card, expect to pay a transaction fee. Whenever you pay in another currency, it is converted first to the US dollar before converting to Philippine Peso.
Expect the converted amount of the item you bought will differ from the amount you see on the bill.
How to Avoid Bank Fees:
There is no way to waive the fee. If you have enough cash, avoid using your credit card unless you think the rewards are worth it.
0% Balance Transfer
This may help you settle your previous credit card debts, but expect the bank to charge a processing fee and interest. Usually, banks offer 0% or lower interest rates than your previous ones. If you fail to comply with the monthly installments, you have to settle the full amount and pay for penalties. Some banks increase their interest rate for default card holders.
How to Avoid Bank Fees:
Pay the monthly installments on time.
Why do you feel that banks cheat you at times?
The truth is your bank is not robbing you. However, you get surprised with some fees charged to you because you did not fully understand how its services work.
What you don’t know is that banks take chances that you will make mistakes. That way, they legally charge you fees. Thus, make it a habit to read the fine print and learn financial literacy to protect your finances. Read contracts no matter how pressured you fill, and do not hesitate to ask questions.
You will be thankful that you took the time to understand each bank transaction and have saved yourself from a terrible financial mistake.
Avoid such financial errors when you take out a fast cash loan from legal moneylenders like Cash Mart!
