Bank services are becoming expensive. Here's the way out

Banks do not offer free lunches any more. They have started charging the consumer for each and every small service they give. This is undoubtedly increasing the cost of banking in India. But definitely there is a way out.

Today, the Mint and Economic Times have reports dealing with both these issues. Get ready to pay more for basic banking, the Mint report said. Cut costs by banking online, the ET report said.

According to the Mint article, at least 13 banks this year so far have either increased or revised their service charges. Some of them have started charging fees for services that were earlier free. The charges could be for SMS alerts which you receive from the bank or for issuance of debit/credit cards and even annual fees for cards and various types of savings accounts. A few banks have even increased charges to deposit cash in your accounts, the report said.

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Among various reasons they cite for the increased charges are customers misusing free services and an increase in SMS charges by telecom service providers. Banks are saying that since their costs for providing service is increasing, they have to pass on such charges to the customers.

For banks, the RBI mandating migration from magstripe cards to chip-pin cards system is also a reasons to increase the charges for customers. Read the whole Mint story here.

According to the ET Wealth report, you can save money by opting for net banking. And most people, don’t realise they pay more for services while banking at a branch compared with banking online.

Net banking is a cheaper option for customers, since the cost from banks point of view is also much lower compared with other channels. Servicing a customer at a bank branch is most expensive, followed by ATM, followed by net banking.

And banks are more than happy to pass on the cost to customers when it comes to branch banking.

Not only is net banking fast and cheaper compared with branch banking, you can also use the facility to pay bills online.

Firstpost take: If you feel your bank charges are too high, look for another bank. But, since most banks have increased charges, it’s going to be difficult to get all services free or at lower cost. Public sector banks may charge lower compared with most private and foreign banks, so you may give them a shot. These days a few public sector banks too offer a good level of service, almost at par with private banks. If you prefer staying with your own bank, may be it’s about time you move to net banking. Of course, you need to update yourself with safe net banking habits. Remember to close savings accounts you don’t use, that way you won’t need to pay annual fees for accounts that are no longer used by you. And finally don’t have more than two-three accounts.