When you go into a bank as a customer, your bank representative is the one who helps you every step of the way, providing you with the financial products or solutions that are the best fit for you. However, when it comes to understanding where their financial interests lie, it is important to be aware of the possible hazards you might face. Chances are, a bank representative will do their best to earn your trust and loyalty as a customer, but it’s essential to remember that the bank is a business after all. While this does not mean that every banker or bank teller is untrustworthy, it’s necessary to consider that as part of a large financial corporation, it is their duty to sell you products that will benefit their employer, and this means there are some bank secrets that you, as a customer, are not privy to. So here are ten things your banker most probably will not tell you:
1.They might offer you very limited options:
It’s very likely that your banker will only offer you financial products or services from their own bank since that benefits them. Although there could be options offered by other banks that are more suitable for you, it is their job to maintain you as a customer, even if that means selling you a product that might not be in your best interest.
2. Bankers are essentially salespeople:
All bankers are incentivised to sell you a certain product, solution or service and this includes insurance plans and credit cards. The more you buy from your banker, the more money the bank makes. While finance brokers also do get paid by the banks for the services they offer, that income generally must be declared. Bank tellers, on the other hand, get a “referral fee” for steering you towards the investment side of the bank. Employees are not supposed to make unsuitable recommendations but they do receive a commission upon making a sale, so that is a factor that heavily influences how the banker or bank teller attending to you guides you.
3. The bank has three doors:
The first door is the front door where most retail clients and regular customers enter. The business branch is available to larger accounts where the bankers deal with more complicated investments and are more business savvy. The institutional branch is where only the people in the inner circle of financial institutions or the so-called big players of the branch are allowed to enter.
4. Mortgage rates are usually negotiable:
This is one of the biggest bank secrets. Generally, mortgage rates are negotiable, as are other costs involved in obtaining a mortgage, like a loan origination fee. While you may not be able to lower the rate directly in some cases, you can still buy down your interest rate by paying mortgage discount points. Since it is preferable for the bank to drop the interest rate rather than lose a customer, if you ask your banker, they usually are able to give you a better deal.
5. Offset accounts might be a better choice than a term deposit.
Putting spare cash or savings into an offset account makes you more money than term deposits or savings accounts. When you place the money in a term deposit, you will be paying tax on the interest at the marginal rate, but placing that money in an offset account effectively earns you an amount equivalent to the interest rate you are paying on your mortgage.
6. Bank fees are a huge money-maker:
The fact that fees are actually amongst the biggest money-makers for a financial corporation is another bank secret and something that most customers are usually unaware of. Additionally, bankers might not inform you that some fees can in fact be waived. Even punitive fees such as non-sufficient funds fees can bring in a lot of money for banks. Some institutions can charge you if a cheque bounces and even with overdraft protection that ensures that the cheque is paid, you’ll still likely have to reimburse your bank.
7. Protection of personal information is not airtight:
While banks want you to know that your personal information is protected and that they respect your right to privacy, your information will still get shared with countless companies and organizations your bank is affiliated with.
8. Bank tellers have access to your financial accounts:
If you find yourself wondering “who can access my bank account information?” you should know that all your activity is recorded by your bank and while the teller may face consequences for accessing your accounts without good reason or permission, it still cannot be ruled out as a possibility. One of the reasons bank tellers can get fired is identity fraud, insider theft and even manipulation of credit card accounts.
9. Bankers are not financial advisors:
It is a common assumption that bankers are equipped or even obliged to give you all the necessary guidance to make the wisest financial decisions, however, that is not the case. While it might seem that your banker will make decisions for many important financial matters, such as your loan application, for example, the reality is that the system is what assesses it. Your information is fed into a computer and processed depending on the data. Also, it’s important to note that what is in the customer’s best interest might not be according to the banker’s or bank’s agenda.
10. They may not tell you exactly where your money goes
Once the bank has your money, it will typically be used to provide loans (home, auto, student, etc) for other customers. If your funds are not covered by fixed deposit insurance, the bank might not be the safest place to deposit your money, and while bank failures might be rare, they do happen. Even if a financial corporation is struggling, they might not divulge bank secrets to a potential customer, but this leaves the customer at risk of loss if the corporation should sink. Additionally, your bank also invests money in government securities or certain corporations. If your bank invests in an industry that does not align with your personal views or ethics, such as fossil fuels, you might not be informed regarding the same, thus taking away your freedom of choice. The assumption that you will always get the best deal because you are a loyal customer is a faulty one, which is why it is important to consult a financial advisor and invest responsibly.
These are a few bank secrets to keep in mind while choosing which bank or banker to go to for your financial solutions, which you might not be informed of directly but would have to find out over time. For this very reason, it is advisable to work with a reliable and seasoned finance broker in order to balance out the odds. Laying out a safety net for your finances early on will help you prepare for future challenges and opportunities that emerge as the market evolves.