Watch Out For These Fees!

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Some bank forced certain expenses on customers. For example, Mary was slapped with a monthly fee of RM1 for SMS alerts on her account status although she did not subscribe to the service, and she never received any SMSes.

Sure, in the real world, we often need to pay for services or products we use. But some are unreasonably high while others creep up upon us or are hidden in fine print. Here are some fees that you may not be aware of.

Inactive accounts

Have some money in a bank account that you’ve forgotten about? It might just be collecting dormant fees. Bank Negara defines a dormant account as “ an account that has had no trasanction for a specific period, that is, 6 months or 12 months.” In this case, if your dormant account has a balance of less than RM10, most bank will forfeit your remaining balance and close the account.

If you’re only depositing money into your account, it will be labelled as dormant. For some banks, a withdrawal activates an account, but a deposit doesn’t. A few banks also charge fees ranging from RM5 to RM10 for sending notification to account holders that their account are inactive. Most savers do not realize that their accounts are shrinking each year, as the annual service fee is not brought to their attention. An account holder with RM50 in his dormant accout will have no money left in five years.

Foreign-currency fixed deposit accounts

While many banks eagerly promote such accounts, beware of the exchange rates or administrative fees.

Peter earned US dollars when he was working for an international organisation in Jakarta. When he brought the denomination home to be deposited into a foreign currency fixed deposit account at Hong Leong Bank, he was informed that foreign currencies were not accepted. The only way for him to do it was to convert US dollars into ringgit first, then converting it into US dollars again. This was a double conversion for him. Banks also don’t give the rates that money changers do. Customers lose out in terms of exchange rate losses. When he asked about withdrawals upon maturity, they told him that they would have to convert the US dollars into ringgit.

Thus, depositors like Peter are looking at losses of 2% to 3% each time a conversion is made. Furthermore, if foreign currency deposits are meant as a tool to hedge against currency risks, then requiring the foreign currency to be converted back to ringgit defeats the purpose.

Banks like UOB, for instance charges a 1% handling fee on the foreign currencies you deposit. When you withdraw your funds in cash, another 1% will be levied on your principal. Taking their minimum deposit of AU$3,000 for example. You would have to pay a minimum AU$30 (about RM90) for depositing your money, and another AU$30 in handling fee when you withdraw the funds. While the interest you receive for the year is AU$205.50, about 30% of it would have gone towards handling fees.

Credit cards

When it comes to credit cards, before you opt for cash advances, balance transfers or other services, make sure you scrutinise the fine print.

Easy payment schemes as one area that has “severely short-changed consumers”. These loans are advertised as interest-free although an administration fee is often applicable. Purchasers fail to understand that there are catch provisions incorporated in such schemes. Once a person defaults on a payment, th transaction would be converted into a normal credit card loan and interest at 18% per annum will be charged as usual.

If your payment cheque is dishonoured, banks could charge you RM50 to RM150. If you’ve gone over the limit, you could be charged a fee of up to RM50 for a replacement.

As for cash advances, you could be charged 5% of the amount withdrawn or up to a minimum of RM50.

Documents for home loan

Some banks charge you fees for helping with “paperwork” that you require. Aside from a processing fee for approving applications (which can reach RM200), some banks also charge fees for issuing a confirmation letter for EPF withdrawals (up to RM50) and redemption statements (up to RM100). Consumers are often placed in a Catch-22 situation when they find out about these fees after they have entered into the agreement with the banks.

Insufficient funds

Make sure that you have sufficient funds in your current account as a dishonoured cheque could cost you a fee of RM50 to RM200 and a stop-payment request could cost you RM100 to RM160. For example, a bank imposes RM150 for a dishonoured cheque due to insufficient funds, while its counterpart in Singapore charges up to $S40 (about RM92). For stop-payment request due do insufficient funds, the bank charges RM150 while for Singaporean counterpart charges up to S$30.