Are banks charging transaction fees?
If you are concerned about whether your bank is charging
you for cash withdrawals or other banking tasks – read on.
Demonetisation changed the entire fabric of
our society as we know it. As dramatic as it sounds, it was the single most
influential event that changed people’s perception about savings and money. Soon
after demonetisation was announced on November 8, 2016, people were forced to
adopt a digital spending lifestyle – they had money in the bank but no way to
get cash! The initial days following the announcement were chaotic, to say the
least – banks did not have enough cash to dispense to the public, and it took a
while for ATMs to be up and running with the new Rs 2,000 and Rs 500 notes.
A few months down the line, in the early
part of 2017, some banks in the country sprung an unpleasant surprise on
customers. They announced that they would now charge ‘transaction fees’ on cash
withdrawals from the bank branch. While some banks like HDFC Bank would charge the transaction fee after every four or
five withdrawals/deposits, there were rumours that others like SBI Bank would
charge it after every withdrawal/deposit.[1]
However, banks also made it clear that
these charges would apply only on cash withdrawals/deposits from the bank, and
not from ATMs. Banks like Axis Bank also announced that there would be no
charges on withdrawing/depositing a maximum amount of money in a single
day/month. ICICI Bank declared it would charge Rs 5 per Rs 1000 withdrawn or
deposited at both home and non-home branches, after the first five free
transactions.
These transaction fees would apply to both
savings as well as salary accounts, prominent banks in the country reiterated.[2]
Why transaction fees are fiscally crippling – and other charges you didn’t know about!
The logical explanation for these
transaction charges seems to be that banks wish to cut the costs of operating
bank branches. With customers increasingly charged for almost all transactions,
they are being ‘persuaded’ to opt for digital bank instead of branch banking.
Long accustomed to dabbling in only small
amounts of cash for daily expenses, Indians are now forced to withdraw money in
larger chunks. If you are to be charged, say, Rs 150 for withdrawing money
after four free withdrawals, then you would rather withdraw a larger amount at
the start of the month and fund your expenses from it.
On one hand, the transaction fees may put
an automatic curb on overspending, as nobody is too keen on being charged on
cash withdrawals. On the other hand, it is a financial affront on one’s savings
– customers are not thrilled about paying to withdraw the money lying in their
own bank accounts. However, it is baffling that customers may be charged money
even for depositing extra cash. Additionally, some banks are also charging a
certain percentage of money on the bills generated when you pay by debit/credit
card!
Transaction fees defeat the very purpose of
checking accounts, i.e. to have money in a spending account for monthly
expenses. Whether in the form of fees on every cash withdrawal, or whether they
are charges levied on electronic transactions, these charges deplete the
account and put restrictions on usage.
Besides, in the post-GST era, you are
liable to be charged more for not maintaining a minimum account balance. Many banks
charge customers when their account balances dip to below 75% of the prescribed
balance. Add 18% GST to this penalty – and you are left staring at a hefty cut
in the money lying in your bank account.
You might also be charged for SMS alerts on
account usage. There are reports that HDFC Bank will charge customers holding
less than Rs 25,000 quarterly balance in their accounts at Rs 15 per SMS alert.[3]
How to get around the transaction fees issue
- In this scenario, it is financially prudent to consider banking with banks that do not charge transaction or convenience fees. This applies to e-banking or online shopping, as well as money withdrawals.
- A few banks like DBS Bank are not levying additional fees on customers’ withdrawal of their own money[4]. In fact, DBS Bank offers unlimited withdrawals from any bank’s ATMs any number of times in the month, for free. Besides, DBS does not levy any transaction costs for withdrawing money from the bank, or paying for online goods and services.
- Withdraw money only from the ATMs. But do check your bank’s policy on charging for withdrawals from other bank ATMs.
- Close the accounts you no longer use. If the minimum balance has dipped in these accounts, then you will be forced to pay penalties on the same.
- Go paperless in your daily banking, but know the documentation charges your bank charges.
[1] http://economictimes.indiatimes.com/industry/banking/finance/banking/confused-over-the-new-cash-transaction-charge-heres-what-you-should-know/articleshow/57425856.cms
[2] https://yourstory.com/2017/03/banks-charge-rs-150-4-cash-transactions/
[3] http://www.firstpost.com/business/banks-charge-you-for-almost-all-services-heres-how-to-beat-them-3319102.html
[4] https://www.dbs.com/in/treasures/default.page
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