Banks - Friend or Foe?

Are they really? Lets find out...

What the bank disclose about your bank records

Most banks have certain policies on the disclosure of your personal information to private individuals. They all have rules regarding the information it will make available. They never divulge information unless there is a court order. But it is not the same when people from credit bureaus or genuine grantors of credit, inquire about your bank records.

Banks usually are very open in supplying information. Especially if you list the bank as your credit reference.

The following are the information the bank usually discloses:

1. Checking Account status - whether it is good or there have been overdrafts.

2. Loans - if you have existing loan with the bank. They even give the information on how long the loan is and if you are making the payment on time. Also the type of loan you have with the bank, mortage, personal loan or auto loan.

3. The size of your savings account - they don't usually give the the exact amount but they give the idea how much by providing the number of figures of your deposit.

Banks give credit institutions updated information about your available credit and the manner you are paying your loan. These are at times the basis of credit card companies in giving your maximum allowable credit lines.

A good number of merchants inquire from the bank if the check you are presenting is good. They also inquire if the credit card you are presenting can cover the amount you are purchasing. They don't give the exact amount but they will tell if the merchant can go ahead with the transaction.

Now, the question is, can we prevent a bank from giving out this information?

The answer is No.

It is virtually impossible to stop them from giving away the information on your bank accounts. Unless, you are doing business with a very small bank and they know you well. You can always request them to withold any information on your bank accounts. This is especially true if the bank is not automated.

The only setback of this is, if you wanted your credit grantors to get the necessary information on your bank accounts to be able to obtain additional credit more easily.

Banks Play Tricks with Interest

Loan officers play tricks for banks to earn an additional 1/4% or even 1/2% from borrowers. Here are some of the tricks to watch out.

1. Loan officers prefer to do the negotiation at the bank. Since it is a familiar territory, they have the advantage over the borrower.

2. They don't mention the interest rate at all. They just fill it in on a note.

3. They will give you an x% since you badly need the money today. Promising to discuss it later for a much lower rate. He hopes that you'll never going to bring it up again. Certainly he won't.

4. They will talk as if the rate for a certain type of loan is final and no longer negotiable when in fact there is always room for negotiation.

5. They intentionally postpone the rate discussion for as long as possible, hoping the borrower will weaken under deadline pressure.

6. Emphasizing on how little the interest cost after taxes, comparing it with finance company rates, secondary mortgage rates or the cost of equity capital.

To counter some of these tricks, you may want to try these.

1. The first question you should ask to the loan officer is the interest rate so you will have this information as your basis for future negotiation.

2. Do the negotiation in your office not at the bank. This will give you a familiar ground.

3. Negotiate everything as a package including the rate, repayment schedule, collateral, compensating balances. Remember, bankers strategy will be to try to nail down everything else and then negotiate interest rate when the borrower has no more leverage and no room to maneuver.

What Banks Don't Tell You

1. Some banks say they let you draw on all checks immediately, provided you put up another bank account as collateral. Truth is, if a check backed by a six-month certificate bounces, the bank can break into the certificate before maturity. If it happens you will have to pay an interest penalty.

2. Banks like to publish their effective annual yield, whereas money-market funds are legally permitted to advertise only the simple interest rates. The long standing rule inadvertently conceals the fact that money-market funds do compound interest on a daily basis. If a bank and a money-market fund pay the same rate, the bank will appear to offer more by advertising the effective rate.

How Safe is Your Bank

When banks run into financial problems, they behave like any other troubled company. They sometimes try to hide problems and limp along the best they can. Here are some signs to watch out.

1. There's a high turnover among the officers. 2. Paperwork and record-keeping become sloppy. 3. The bank encourages customers to extend credit when officers know it really isn't necessary.

About The Author

Samuel Quino is the website publisher of www.guide-2.com, where you can find ways to transfer money overseas. Visit Guide-2.com now and get your FIVE Free-Bonus-Giveaway Ebooks upon sign-up.