Automatic account upgrades, benefit or disadvantage?
Lechedzani Pitso | Monday May 26, 2014 14:40
Do you often wonder if the way things are sold to us give us the impression they are a privilege, when later we realise they are simply another way to make money from us?
Automatic account upgrades
In many cases, we are given “opportunities” that are made to sound so wonderful; we forget to read the small print before we agree to the terms. In fact, in some cases, so long as we accept the new card, we are automatically agreeing to the new “T & C’s” that go with that card or account. This often means higher fees, and sometimes higher interest rates.
Do you know what fees you are paying?
Many of us opened our bank accounts years ago, and have forgotten what fees we are actually paying. Some of us have had some Automatic Upgrades rewarded to us, without our knowledge. It is important to know what fees you must pay each month and make allowances for them in your monthly budget plan.
Do you reconcile your personal bank account? Keep all the slips and tick them off on your bank statement each month to make sure you are only being charged for what you have spent? If you do, you will be 1 in 10 people who do. You will also wisely know what monthly fees you are paying on your bank account. Well Done!!
If you are part of the majority group, who places their trust in the bank, in the hope there is never any human error, you are at risk of losing some of your money unnecessarily.
Know your bank charges and keep your personal bank account reconciled.
Automatic upgrades
- higher fees
It is fair to expect to pay more for more personalised service and more advantages. If your service provider/bank/shop offers you an automatic upgrade, you should expect to pay more. The provider will have to pay more staff for personalised service, give higher credit which means more risk, etc. After all, they are a business as well.
More access to debt
As our relationships grow with our chosen bank, as we practise good credit repayments, our bank will often offer you a higher credit limit. Simple maths shows us that the more we owe, the more we will be paying in interest, even if the interest rate stays the same.
Unless there is a specific need, why do you want more access to credit? It is simply another loan that you will have to repay at some stage. Are you sure you want and can afford more debt?
Why does your credit card allow you to spend more than your limit?
I have noticed recently, that although I have a credit limit in place on my credit card, I can keep swiping merrily, again and again, over my limit. The only restriction is that I cannot withdraw cash from the ATM.
Is this a wise practise to do? If you are on holiday and feel weak in your resolve of overspending, are you really going to have the self-control not to overspend your limit on your credit card?
Author: Lechedzani Pitso – Financial Wellness Trainer with S.C.I. Training (Pty) Ltd. © S.C.I. Training run financial wellness programmes in Botswana. For help and information contact them on 3180243 or 72309718 or leche@wellness.co.bw