What your Bank Isn’t Telling you

Your relationship with your bank is an important relationship. Chances are, you are going to use the same bank for many years regardless of your financial situation. Therefore, it is important to know what your bank is doing to and with your account or accounts. I am not stating that you need to know every move that is made. However, I am stating that you need to be aware when your bank changes it terms and conditions on any of your accounts or credit cards.

For the most part, not much is going to change on your checking or savings accounts of which you will not be aware. For example, it is common knowledge that if your savings account has an adjustable interest rate, the rate will adjust based upon economic conditions. Additionally, if you have certain fees attached to the use of your checking account, you will be notified when such fees are changed (whether for the better or the worse). Additionally, when a term on your credit card account changes, you will be notified of such a change. The problem with all of these changes is that most of the time your bank will not tell you how the changes affect your accounts.

As stated above, it is true that economic conditions can change the interest rate that you are receiving on your savings account. However, what is generally not disclosed to you is how far the interest rate could be decreased. In other words, if your interest rate is currently 4.00% and the economy starts to falter, could your interest rate decrease to zero? These things are not told to you. It is unlikely that your savings account interest rate will decrease to zero, but it can decrease.

What if you got a letter from your bank telling you that a term has changed on your credit card statement? The bank sends you a new credit card agreement that is usually printed in small print inside of a fifteen page pamphlet with enough legal jargon to drive a competent lawyer crazy. Therefore, how are you supposed to know and understand the effect of such changes? The bank does not willing give out this information and thus, you have to discover the effects yourself. For example, what if your new credit card agreement has a universal default clause in it? Do you know the effect of such a clause? Did the bank tell you?

The point is, bank and other financial institutions usually do not disclose the effect of certain changes to agreements and accounts. Although it is true that the banks usually always notify you of such a change, unless you understand the effect of such a change, the bank’s notification is partially useless.