5 Secrets About Money American Banks Don’t Want You To Know

October 1, 2024 DINARRECAPS8

5 Secrets About Money American Banks Don’t Want You To Know — Plus How To Beat Them At Their Own Game

Maurie Backman Tue, October 1, 2024 Moneywise

As consumers, we rely on banks to keep our money safe and secure. They’re an essential part of our economy — but they’re also a profit-seeking business.

As much as banks are a mainstay of people’s personal finances, some of their practices aren’t exactly as transparent as they should be — and many Americans have caught on.

In fact, a 2023 study from the Associated Press-NORC Center for Public Affairs Research revealed that only 10% of U.S. adults have a “great deal of confidence” in banks and financial institutions, while 56% say the government is not doing enough to regulate the industry.

There are certain tricks banks employ to make money and protect their own interests — and these tactics aren’t necessarily general knowledge.

Here are a few of the biggest banking secrets you should know about.

1. Sneaky fees

From maintenance fees to overdraft charges, one of the main ways banks make their money is through various fees. Even ones that seem negligible at first glance can add up over time.

For example, personal finance celebrity Dave Ramsey once called maintenance fees “some of the sneakiest,” adding that, “you agree to them when you open an account, and you may not even realize it until they show up on your statement six months later.”

But it may be possible to avoid paying maintenance fees. For instance, some banks may waive the fee if you maintain a certain minimum account balance.

However, fees on big loans, such as a mortgage, are often hiding in the fine print of your contract. Although it may feel tedious, always read the fine print before you open any account.

If you come across any fees, in general, you should feel empowered to contest it. After all, a bank is like any other business — they don’t want to lose you as a customer, especially if there’s a risk that they’ll lose you to a competitor.

2. Credit cards offer more protection than debit cards

Using a debit card over a credit card can be beneficial, especially since many businesses impose a surcharge on customers for credit card purchases. However, credit cards tend to offer more protection than debit cards.

Often, when there's a fraudulent transaction on your credit card account, you can dispute it. Typically, the charge will be removed from your balance while it's being investigated, or you'll receive a credit for that charge so you don't have to pay for it.

But when your debit card is used fraudulently, you have less protections in place. You generally only have a small window of time to report a fraudulent transaction on a debit card — and that window may depend on the rules and regulations your bank has in place.

If your debit card or PIN number is stolen, you may find yourself responsible for up to $500 in unauthorized transactions if you notify your bank after two business days, according to the FDIC.

With a credit card, on the other hand, you could report fraud several weeks later — on average, around 60 days after the fact. In some situations, it can be even longer.

For this reason, it could pay to use a credit card more often than your debit. As an added bonus, credit cards let you rack up points or cash back on your purchases, which debit cards don't.