Although a bank tariff sheet at first glance looks like a basic price list, there may be much more to a tariff sheet than just a monthly account service fee. It may include information about limits on transaction, cash withdrawal, minimum balance, transfer, replacement cards, or exceptional conditions. For the beginner, the problem is not how difficult it is to understand one specific number. The problem is how to connect multiple conditions that determine the actual price of an account.
Determine exactly what kind of product this document describes. Banks issue separate tariffs for a checking account, a savings account, debit or credit cards, and so on. Product names that look the same may have completely different conditions. Check the name of the product, the type of consumer, the currency, and the beginning of the term of a tariff sheet. A tariff sheet may no longer be relevant to fees, so the effective date of its term may need to be compared.
Differentiate between fees that are fixed and those that are charged with use. The fixed fee could be a service fee on the account for the month, whereas the variable fee would be charged every time you make a cash withdrawal, bank transfer, or paper statement. Take a fictitious account where the service fee per month is $30. Though this might look low, the fee would be raised to $60 for the month if there were three transfers that each cost $10. Therefore, when making comparisons, the standard fee and the estimated amount that will be needed to do the transactions must be combined.
Just as important as the fees is the limit. A bank may offer a free transfer until the limit of, say, three per month, and then charge a commission based on a percentage. The account might have no commission for a withdrawal at its own ATM, and a charge elsewhere. Some may have a minimum fee and a percentage, and if the withdrawal fee is 1% with a minimum of $20, then withdrawing $500 would still cost $20 rather than the expected $5. You have to read all of the fee equation so that the low percentage doesn’t get misread.
Any condition or exception may appear in a note, a footnote, or in some explanatory text nearby. The monthly fee may not be collected if there is a specific condition of maintaining a balance or spending a certain amount on your debit card, or depositing a certain amount of salary or other money into your account. A promotion may be offered for a free service for a certain period of time and then that fee can automatically change afterward. List the conditions in an adjacent column to each fee in plain language. Instead of copying the wording of the document, which might say “free account service fee”, write down something like “$0 per month if the stated condition regarding balance is met, otherwise $30”. This will transform a promotional claim into a testable rule.
You can then try it yourself with two fictitious tariff sheets and a blank comparison form. Fill out the form with the purpose of a product, how you can access it, the fixed fee, transfer fee, cash withdrawal limit and conditions, exceptions to the fee, and anything you did not understand. Then, create a sample month with a scenario of using four transfers, making two cash withdrawals, and requesting a replacement card once. Finally, calculate the cost of the scenario under each tariff. Do not use real card numbers, account numbers, password, a copy of a bank statement, or any kind of personal identity for this exercise.
Before applying for a financial service from a bank, be sure to ask the bank itself about any condition you have not understood, and keep a copy of the tariff or product sheet from the current month. Although a beginner does not have to learn all banking terms by heart, it would be more important to develop a regular process for going through a list of questions and a set of specific questions, including: “What fees are levied and how? When are they charged? What limits apply? When will the fee be waived? What happens when the condition is not satisfied?” This is the process through which tariff sheets will be easier to compare and will prevent clauses like this from being converted into hidden costs.