These days, customers are growing more aware of the many ways their banks cheat them. Business banking customers need to be especially wary of the potential for abuse.
It’s reasonable to be concerned about how your financial institutions treat you.
One way small business owners are retaking control over their money is by seeking innovative ways to get the loans they need to grow their companies.
According to Advance Funds Network, here are some ways banks cheat their customers:
(1) Account maintenance fees
Banks have since replaced Commission on Turnover with the account maintenance fee. Although many banks charge maintenance fees, most will waive these fees if your business account balance remains above a certain amount. Ideally, choose an account with no fees. If fees are unavoidable, maintain the minimum balance.
(2) ATM withdrawal fees
While it is true that banks incur fees when customers access Automatic Teller Machines outside their network, these charges are often exaggerated as a means of profit-taking. The Central Bank of Nigeria has reached an agreement with the banks to charge N65 after the fourth ATM withdrawal from other banks’ machine each month as ATM fee. Reduce the fees you pay by ensuring your bank has a substantial ATM presence in your area of operation.
(3) Overdraft fees
Overdraft fees are among the most typical ways banks profit from accountholders. Make sure your bank offers protection from occasional overdrafts. At the least, banks should offer email or text alerts if account balance gets low. Interest rate on overdraft should be reduced drastically.
(4) Wire transfers
Except under the most unusual circumstances, money transferred by wire should be available instantly. Long delays are caused by institutional policies, not technical limitations. Before opening an account, contact your prospective bank to ensure that transfers will be deposited promptly.
(5) Credit cards with variable rates Entrepreneurs and small business owners are frequently targeted using credit cards with initial low rates that can make balances balloon in the future. Your annual percentage rate with such a card will frequently go up sharply after the first year.
(6) Business credit cards with annual fees While cards with annual fees are a common way to help consumers build credit, business credit cards should never have these fees. Be alert, since such fees are typically charged only once a year and can slide under the radar if you are not careful.
(7) Business credit cards with deceptive rewards Credit cards are becoming more popular in Nigeria by the day. Banks sometimes want business credit cards to come bundled with a package of rewards. Understand, however, that the exchange rate between the naira spent and rewards gained is usually kobofractions on the naira. Rewards can be used to dress up an unfavourable offer.
(8) Aggressive marketing practices for business customers Many banks maintain commercial partnerships with a network of businesses around the country. Examine your account and credit card agreements carefully to ensure you can limit the extent to which your information is provided to these companies. You should also be able to opt out of “partner” advertising.
(9) Business loan repayment fees If you pursue a business loan from your bank, be aware that paying promptly can cost you. When arranging medium-term loans, many banks will tack on fees for paying off the loan before the anticipated end date. The manoeuvre is solely to protect banks’ bottom line.
(10) Limited access to crucial information Business owners have strict requirements when it comes to tax reporting. These demands can become highly inconvenient when your bank only provides a year’s worth of statements. Most banks charge extra for accessing older information and grant such requests at their leisure.