Indian banks are a key part of your everyday money life but they also slip in small charges, fees, or silent losses that most customers don’t even notice. These tiny leaks in your finances can add up to thousands of rupees every year if you’re not paying attention.
These costs aren’t always illegal but they are easy to overlook if you’re not watching closely.
This listicle breaks down 12 common ways Indian banks quietly cost you money and more importantly, what you can do to stop it. Whether you use private or public sector banks, this guide will help you plug the leaks and take back control of your money.
1. Minimum Balance Penalty You Forgot About
If your average monthly balance drops below ₹2,0000-₹10,000 (varies by bank and location), you get hit with penalties starting from ₹150 + GST. People often forget this, especially when opening multiple accounts.
What to do:
- Convert idle accounts to zero-balance accounts like SBI Basic Savings or Jan Dhan.
- Set calendar reminders to check balances before the cycle ends.
- Close unused accounts rather than let them quietly drain money.
2. Using the ATM Too Often
Most banks allow only 3-5 free withdrawals at non-home ATMs per month. After that, every withdrawal, even a balance check, can cost ₹20-₹25.
What to do:
- Withdraw a higher amount fewer times.
- Use UPI or digital payments when possible.
- Use your bank’s own ATM to avoid third-party charges.
3. Auto-Debited Insurance You Didn’t Ask For
Many customers unknowingly sign up for accidental insurance, health plans, or credit card insurance when opening an account or card. These often auto-renew every year.
What to do:
- Review your account statements for “debit mandate” entries.
- Visit your branch or net banking to cancel unwanted insurance.
- Only opt in when you’ve read the benefit terms fully.
4. Pushy Investment Products With Hidden Charges
Bank staff often push mutual funds or ULIPs with high internal commissions. These products may lock your money for years and give poor returns.
What to do:
- Never invest in a product on the spot take time to review the offer.
- Ask directly: “What are the charges and lock-in period?”
- Prefer direct mutual funds via platforms like Zerodha Coin or Groww.
5. SMS Alerts You Don’t Really Need
You may be charged ₹15-₹30 per quarter for SMS alerts, even if you barely use your account or get alerts via app.
What to do:
- Check SMS alert settings in your mobile banking app.
- Disable optional alerts or request only critical alerts.
- Use the bank’s app for free push notifications.
6. Paying Only the ‘Minimum Due’ on Credit Cards
Paying only the minimum amount leads to compounding interest at up to 42% annually. It feels convenient but silently builds up debt.
What to do:
- Always pay the total due on or before the due date.
- If you can’t, convert the amount to EMI to avoid high interest.
- Use the “Auto Pay Total Due” option via your net banking.
7. Paying for Extra Cheque Books
Banks usually offer 10–25 free cheques per year. Beyond that, you may be charged ₹2–₹5 per cheque leaf.
What to do:
- Use UPI or NEFT for most transfers.
- If you need cheques, request a bulk book to reduce per-leaf cost.
- If possible, switch to digital mandates for regular payments like rent or school fees.
8. Letting Accounts Become Dormant
If you don’t use a savings account for 2 years, it turns dormant. Reactivation involves KYC again and may delay access to funds.
What to do:
- Make one small transaction every 6 months (₹1 UPI transfer is enough).
- Consolidate funds into fewer, active accounts.
- Use digital wallets like Paytm or PhonePe linked to active accounts.
9. Prepayment Penalty on Loans You Want to Close Early
Some banks charge 2%–5% penalty if you try to close your personal or auto loan early—even if you want to pay in full.
What to do:
- Always read your loan agreement’s fine print.
- Choose lenders that offer zero foreclosure charges (like some NBFCs).
- If penalized, ask for a waiver it’s negotiable.
10. Extra Charges on Foreign Transactions
When you swipe a card abroad or make a USD payment online, you’re charged forex markup fees (usually 3.5% of transaction + GST), often without clear notice.
What to do:
- Use forex cards when travelling, which have lower fees.
- Avoid using debit cards internationally.
- For online payments, consider services like Wise or Niyo Global.
11. Paying for NEFT/RTGS/IMPS When It Should Be Free
Some old savings accounts or offline transactions still attract ₹2-₹20 fees per fund transfer.
What to do:
- Always use mobile or internet banking, where NEFT/IMPS is free.
- Upgrade to a modern savings account with no transfer fees.
- Avoid visiting the branch for transfers unless required.
12. FD Auto-Renewal at Low Interest
If you forget to give renewal instructions, your FD might auto-renew for the same term but at lower rates costing you better returns.
What to do:
- Set maturity reminders on your phone.
- Withdraw or reinvest manually at the latest rate.
- Use laddering split large FDs into smaller ones with staggered maturity.
Summary: Where You’re Losing Money and What to Fix
| Hidden Bank Charge or Trap | How You Lose Money | What You Should Do |
|---|---|---|
| Minimum balance penalty | ₹150–₹750/month + GST | Use zero-balance or Jan Dhan accounts |
| Excess ATM withdrawals | ₹20–₹25 per withdrawal | Withdraw fewer times, use digital methods |
| Auto-debited insurance | ₹300–₹2000 yearly | Cancel unwanted auto-renewals |
| Pushed investment products | Poor returns + high charges | Choose direct investment platforms |
| SMS alert fees | ₹60–₹120 per year | Use app notifications |
| Credit card interest | 36–42% annual interest | Pay full amount, not just minimum due |
| Extra cheque leaves | ₹2–₹5 per leaf | Use UPI or net banking |
| Dormant account issues | Access delays + reactivation steps | Do small activity every few months |
| Loan foreclosure penalty | 2–5% of outstanding loan | Read terms, negotiate waiver |
| Forex markup fees | 3.5%–4% per international transaction | Use forex cards or prepaid travel cards |
| Fund transfer charges | ₹2–₹20 per transfer | Use net banking or UPI |
| FD auto-renewal | Missed opportunity for higher interest | Reinvest manually at latest rates |
Indian banks are becoming more digital but that doesn’t mean they’re fully transparent. Banks are essential but that doesn’t mean every service is working in your favour. Many Indian customers unknowingly lose money through avoidable fees, unnecessary services, and passive habits like leaving accounts idle or paying only the credit card minimum.
To avoid these losses:
- Review your bank statements regularly.
- Question every fee.
- Choose only the services you truly need.
Staying informed is your strongest defense. With just a few smart moves, you can save hundreds if not thousands every year.
