The competition in the Nigerian banking industry has put a lot of pressure on the income generating ability of the banks. To stay afloat and be profitable, various devices are being employed by these banks.
One act, not quite known to many, is that of excess and bogus charges with the underpayment of interests.
Sometimes, the excess charges or undercuts are so small that they go almost undetected or ignored by the victims.
But when the fragments are pulled together, it not only amounts to huge income to the banks but also a huge loss to affected customers over a period of time.
Below are such common infringements and the general guidelines to checkmate them.
Excess interest debit on overdraft/loan:
When you take a loan or overdraft, the interest component is stated (in percentage) in the offer letter.
However, in many cases, we have the actual interest figure/ amount debited higher than the stated percentage.
• Insist that all charges/fees are separated from the interest rate and stated differently and clearly.
• Also calculate the end figures when the stated interest rate, charges and fees are factored into the principal borrowed in determining your full and final repayment figures.
• All interest rates are calculated on reducing balances basis if repayments are spread in instalments (monthly, quarterly etc)
• If you don't know how to calculate this, you can engage somebody who knows. Do not rely on your bankers alone as they may make deliberate mistakes in calculation that will surely hurt your finances.
Overstated and hidden fees/charges:
Many loan facilities and financial services come with fees and charges beside interest rate. Some are conventional while others are simply under-hand.
• Make sure these are clearly stated in the offer letter to avoid unpleasant surprises such as ''hidden charges'' syndrome when you are repaying.
• Most fees/charges are flat rate and one-off and in some cases paid up-front. But if this is merged with your interest rate, insist they are separated clearly as they could also be compounded with the interest component.
• Use CBN approved rates to checkmate your bank's position/figures. You can download current CBN Bankers' Tariff from their website.
• Interest rates on loans are negotiable. Negotiate well and check out competitors' (other banks) offerings.
Overcharged COT and VAT on COT
Commissions on Turnover (COT) are charged against current account transactions only. But some banks advertently or inadvertently place COT on other transactions.
• Query this if COT is misapplied.
• Demonstrate knowledge and you will be left off-hook
• Use CBN approved COT rate to checkmate the calculations of the bank on total COT over a period (usually monthly) or per transaction.
(To be continued)
