This Article has been originally published in the StreetWise Edition – Issue 002 Dec 2017.
Opening a bank account signifies the renaissance of a new era in your life. Whatever the reason, it is a sign of an existing cash flow in your life. Getting a bank is easy and free in this day and age. And it is possible to also open an account that will not attract any monthly fees as the bank clerk will expound.
But there are some hidden charges that the bank will not tell you lest they are queried. These charges are never detailed on the opening account form that you fill. They are also not easily noticeable but they cost you more in the long-run.
Being aware of such charges will help you keep track of your banking costs and save you a lot of cash that you can redirect to other causes.
Here are some of the hidden charges that your bank won’t necessarily tell you:
Standing Order Fees
A standing order is a way of setting up a regular or fixed payment from your bank account to another account for a specific period of time. Your payments will entail of money set at an amount chosen by you.
Every time the transfer takes place, a fee is automatically charged. The fee usually ranges from Kshs 150 to Kshs 300 depending on whether the transfer is to the same bank or a different one.
Every time you withdraw from you the ATM or from the bank’s counter, there’s usually a fee that is paid per transaction. This is one fee that almost everyone knows but don’t understand its magnitude.
Withdrawal from the ATM usually ranges from Kshs 20-35 depending on the bank and it is exclusive of excise duty per transaction while counter withdrawals range from Kshs 150 – 300 per transaction.
Because ATM is the most convenient way for anyone to access their cash, it is the most popular and costly one because of the number of transactions one does per month. You can always calculate how many times you visit the ATM every month and analyze your outlays.
When you take a loan from a bank, several charges are usually imposed on you that will ultimately affect what your total loan repayment amount. Most of these charges are pegged as a percentage of the principal loan. Some of these charges which are the third party include: (Information below is from the KBA portal)
- Legal Fees: The amount indicated is charged by the appointed external Lawyers according to the Advocates (Remuneration) (Amendment) Order, 2014 (as varied or amended). It does not include VAT and disbursements as these will be clear after the Lawyers have completed their work.
- Insurance: The amount indicated above is charged by the Insurer on the basis of the Option selected by the borrower for the period of the Facility. Insurance includes Mortgage Protection, Credit Life Insurance, Fire Insurance, Property Insurance and Car Insurance, where applicable.
- Government Levies: This means Excise Duty at 10% of the Application / Processing / Initiation/ Arrangement/ Commitment Fees charged. The estimate provided in this calculator does not include VAT and other Government Levies.
- Stamp Duty: This is a Government Levy on the sale of the property charged typically between 1% and 4% of the value of the property.
- Valuation Fees: The amount indicated is charged by the appointed Valuers according to the Land Valuers Licensing (Remuneration) Notice 2013 (as varied or amended). It does not include VAT and Disbursements as these will be clear after the valuation work is complete.
- Security Registration Fee: The amount is payable to the Government Registry where the Security will be registered and has not been indicated within this online APR calculator.
The above is in addition to the interest rate component and the associated bank fees like processing and negotiating fees. When taking a loan, always inquire from the loan officer on the breakdown of the Total Cost of Credit.
Foreign Account Currency Fees
Operating a foreign account has its own costs. These are most incurred when depositing or withdrawing. A percentage charge of around 0.25% to 0.50% is charged on the overall transaction amount depending on the amount too.
Late Payment Fees
You are normally charged a late fee any time you default on loan or credit card payments. This has a domino effect on your credit score, as well as the health of your overall credit.
An interest is usually charged off the installment due that month in case of a loan. With credit cards, a percentage penalty fee of up to 6% is charged on the due amount.