Propertyscouts Auckland

10 Myths and secrets banks don't want you to know about. - 4th Dec 2017

Be Careful You won’t always get the rate advertised

Lenders are not always required to offer the rate advertised to all successful applicants. They may only have to offer that rate to a certain percentage of those who have been approved, with the rest offered a more expensive deal.

Watch them! Your bank account isn’t worth the money you’re paying for it

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.

When you swipe, they cash in

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.

Myth - No debt history is not a good thing

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.

 

They can re-order your purchases

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.

Running deposits last

Say you pay money into your account on the same day that you have a bunch of payments due to come out. Banks may run those payments first, meaning you fall into your overdraft and have to pay overdraft fees, before running your deposit, which will bring you back into the black.

You don’t need that insurance

When you take out some form of credit, the bank will often try to sell you some insurance to cover your payments in case something happens to you. However, the small print of these insurance policies may mean that it won’t actually cover ALL of the debt if you can’t. You’re better off making other plans.

Paying your debt off early will cost you more

With loans and mortgages, you’d think that paying off your debt ahead of schedule would be a good thing. But many lenders will slap you with an additional charge for doing so

Closing an unused credit card could hurt you

Banks look at your ‘credit utilization’ 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.

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