Secrets banks don't want you to know
Whether you're spending money or saving it, banks have plenty of sneaky tricks which they employ to milk you for the most cash they possibly can. Here are 20 to watch out for.
7 February 2017
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Whether you're spending money or saving it, banks have plenty of sneaky tricks which they employ to milk you for the most cash they possibly can. Here are 20 to watch out for.
Some bank accounts offer a range of added extras, like free travel insurance, in exchange for a monthly fee. But unless you use ALL of the extras on offer, the account is probably not worth the money you’re paying. Go for a standard current account instead.
When you spend using your debit or credit card, the retailer is charged a fee for processing the transaction. Most of that fee goes back to your bank – so even if you are spending your own money, the bank is still better off as a result.
When working out if they want to lend to you, a bank will look at your financial history. If you’ve never used credit in the past – a loan or credit card, for example – they don’t know how good you’ll be as a borrower. So no history may be worse than a less-than-perfect one.
Learn more with our guide on How to build an excellent credit history.
Some banks will re-order your purchases in a day, from the highest amount to the lowest. That means that if you fall into your overdraft, and your bank charges a fee for each transaction made while overdrawn, you will end up paying more fees.
Banks look at your ‘credit utilisation’ rate when considering any applications for further loans. They want to see how much of the credit at your disposal you are using. If it's too high, you may look desperate. Closing an old card could push that rate up, denting your chances of approval.
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The best deals are saved for new customers. Banks are relying on your apathy towards regularly shopping around and switching accounts, meaning you miss out on the best deals.
The longer your credit history, the better. Banks want to know that you have experience handling debt, so closing your oldest credit card might not be a good idea.
Banks don’t offer interest-free credit cards out of the goodness of their hearts. They are betting that you will make a mess of your repayments, and end up with debt still to pay off when the 0% deal comes to an end. So don’t slip up!