Facts you should know about banks

Banks play an important role in the financial system and the economy. As a key component of the financial system, they provide specialized financial services which facilitate the growth of the economy and livelihood of the community it serves.

If you are still not sure about the importance of the banks, just think and imagine for a moment, a world without banking institution then ask yourself how would you be meeting your financial needs? Nonetheless, most likely you don’t spend a lot of time thinking about your bank.

After all, you just deposit your money, then swipe your debit card or visit the ATM when you need cash, or loans in times of need right? That’s all you need to know about your bank? Not at all.

To get the most out of your money at your bank, you will need to understand a few facts about the banks. In this article, I will share few facts about banking that you should know.

You can use your savings as an overdraft account

There are pros and cons of using banking overdraft options; overdraft protection actually spares customers the extra fees and embarrassment that come with bounced checks or transactions but also if not used correctly, it can be too expansive for the customers. Fortunately, there is a way to avoid these fees; by using the saving account product as an overdraft account, the bank will not need to cover your overdrafts hence it won’t charge you any fees.

As a depositor, you should choose this option of using your savings account as an overdraft since anytime your current account goes over, the funds will be automatically pulled from your savings to cover the negative position hence no overdraft fees will be charged by your bank.

Debit cards are not secured as you think

One of the biggest risks the current customers are facing is the identity theft on debit and credit cards.

The fraudsters will steal the information from the magnetic stripe and the PIN code and use it to manufacture a fake debit card.

This is even worse on debit cards since they have different level of legal protection from Credit cards; It is understandable that many people have growing concerns about keeping data confidential as electronic transactions are processed, but banks work hard to keep data heavily encrypted and secure to fight cybercriminals. In addition, it is worth to note that MasterCard and Visa do promise zero liability on fraud charges but you have to show “reasonable care in protecting your card from loss or theft” and that can be difficult to prove if your PIN code has been compromised.

To avoid this risk, when you use your debit card, avoid using your PIN wherever possible. If given the choice between “debit” or “credit” in any Point Of Sale (POS) transaction, select the “credit” option and sign.

Mobile apps are new way of banking

Most banking transactions now can be done through our mobile phones. You can now transfer funds, view statements, pay bills, and deposit through most bank’s mobile app. Majority of the bank’s mobile app will allow you to do up to 90% of the transactions through them so the decision where to bank should depend on how strong (i.e. easy to read, navigate, reliable, with high levels of security) the mobile banking channel of the bank is.

In today’s world there is no need to visit a physical branch as mobile apps will provide that convenience of you doing the banking transactions at any given time hence saving you time in between.

On the whole, banks play an important role in the financial system and in our daily life. Unfortunately, most of us don’t spend a lot of time thinking about banking but there are actually many details that people need to know about banks that will help them towards achieving their financial goals and some of the details I shared today are: using your savings account as an overdraft to avoid fees, debit cards are not secured as you think, and mobile apps are the new way of banking.

Mr Mkwawa is a seasoned banker