P015 - Lessons learned from 30 years of banking

[rski]

I am trying to talk about a simple basic service that many of us have no clue on how to structure properly or don’t have the time . I have banked across PSU / Private / Foreign banks in India , and US and Singapore . Here is the lesson I have learnt from it

In the intervening period I have had faced the following :

1. Been subject to demat fraud
2. Credit card fraud in India
3. Debit card fraud in India
4. Special card offers that aren’t that special
5. Mis selling by bank employees
6. Cards being used in foreign countries out of the blue
   
7. Forex cards not working in foreign countries
8. Cards being blocked as soon as I have tried to use them in a foreign land .
9. Atrocious charges hitting me out of the blue as I am quietly upgraded

I mean I can go on , but the list is long . It’s taken me 3 painful years to resort things to address utility , convenience and risk .

1. I have segregated income , expenditure and savings .
2. All earned income goes into a joint account between me and my spouse with a private bank . It has a debit card and no loans demat or any cards attached .
3. There are only 2 -3 transactions a month from the income account . One to the expenditure account and one to the savings account and one for any donation that might occur.
4. The expenditure saving account is with another bank which has a saving , loan , credit and debit cards for me and spouse . All expenditure , card transactions are made here. All premiums and expenses are paid here .
5. The investment account only has a savings and demat / online trading ac and can also access US/ Singapore funds . No transactions except savings .

Segregating all three has given me a lot of relief . It has made my CA life a bit complicated but essentially I have

A. The bank that has my loans / cards has no assets.

B. The bank that has my assets has no liabilities and provides services in US and Singapore . All I need to do is maintain my balance here and I have zero balance requirements there

C. The bank where salary gets credit has no assets / no liabilities . Just two
Two transaction in and 3 out .

D. I make it a point to change / reissue cards for the expenditure bank ac every year , or if used abroad , on return to India

E. All three accounts link to different numbers for otp transactions , no interdependence .

In short I have found my formula to a peaceful banking experience.

The biggest mistake I used to make was rely on one bank .

 

[dgan]

@rski This is exactly the three account approach that the book 'Let's Talk Money' recommends.

 

[rski]

@dgan Never knew about it , this is all by trial and error

 

[dgan]

@rski Sure, you would have figured this out separately. I was just pointing out that a famous book too recommends this approach. Their logic is not transaction safety but ensuring that you have a budget and are able to track your expenses.

On the topic of safety of card details, some of the banks like SBI provide virtual cards that can be used on sites that you do not trust 100%.

 

[rsf3612]

@dgan Exactly my thought while reading this post!

 

[jpare93373]

@dgan nice book

 

[fitnessfreak158]

@rski Do you have 3 different mobile numbers too?
I will say managing 3 phones is more difficult than managing 3 bank accounts.even if you have a triple simcard model, a malware can trace all sms.

Also you didn't disclosed how above mentioned frauds happended?

I too faced a fraud ones because of international transaction, since international website have less security features compared to indian websites but Citi Bank was good enough that it refunded the total amount.

According to me it's not the banks, but your transaction habits that are more responsible for frauds.

 

[rski]

@fitnessfreak158 Me , the missus and one spare . Actually we have 6 if we count the ones given to the children the maid and the driver . All three different numbers

The frauds itself would take pages to describe . So I am cutting the sob story short

We travel , therefore our cards are used a lot abroad

 

[fitnessfreak158]

@rski Why not have a separate credit card for international transaction. Much easy to manage.
Just asking out of query.

 

[rski]

@fitnessfreak158

1. Harder to manage as me and missus at 2 each will be 4 cards .
2. It’s more convenient to come back to India and ask for reissue , takes 20 seconds and we get entirely new cards
3. It also complicates my IT return , have to give breakdowns

 

[fitnessfreak158]

@rski Yet I fail to understand why?.

There are credit card insurance as well. You can block it instantly. You can block online transaction, you can set limits.

I wonder what your bank relationship manager must be thinking about you when you keep on changing your card every month?

Why to be so much paranoid that what happened once in past will again happen in future?

 

[rski]

@fitnessfreak158 I really do not care if my bank relationship manager thinks . In fact one requirement for that job is the inability to reason.

The last time someone had an issue because I had cards changed 3x that year , I simply got rid of that bank and that account . I was 25 % of his book.

My own interest comes first , and if a bank cannot understand that , then I do no business with that bank .

They are there to make my life easy , not the other way round .

 

[yaboo]

@rski Cyber security guy here.

Your approach is nearly as good as it gets. I have only one suggestion. Your salary account should not have a debit card. Debit cards can be a nightmare especially if you swipe it somewhere and it is cloned (have seen cases).

It should have only one way of withdrawing funds, preferably through cheque; NetBanking only if you can keep your laptop clean from malware. Use only one machine for logging in.

Ideally it should also have a strict limit on the maximum amount that can be withdrawn at one go. Add funds into your expenditure account once a month. All your other accounts should be funded from your expenditure account.

 

[lovelifelln]

@yaboo What is your opinion about UPI as a mode of transaction? I mostly use UPI ( Google pay and IMobile app by icici bank).

 

[yaboo]

@lovelifelln It's pretty good actually. The formula remains the same though. It needs to be linked to the expenditure account only to limit your losses. Never seen any issues with UPI, but you never know. Also UPI frauds are pretty rampant.

 

[rski]

@lovelifelln BHIM user through and through

 

[%CE%A3%CE%B1%CE%BC%CE%BF%CF%85%CE%AE%CE%BB]

@yaboo Incidentally, what phone brand would you recommend for security, besides Apple?

This is for my mom and dad who are less tech savvy, and own Vivo. The phones are a nightmare of bloatware apps and I am paranoid of them falling for fraud.

Besides this, my dad tends to call up or open links with "offers" for clothing of all things. I feel like I should just get both of them one of those basic Nokia sets and call it a day.

 

[yaboo]

@%CE%A3%CE%B1%CE%BC%CE%BF%CF%85%CE%AE%CE%BB Feature phone would be the best!

Then you can look at Google Pixels. Google had the Android One program, but it's not alive anymore. Nokia also had almost zero bloatware phones, but they've been pushed out of the market by Chinese companies.

After that comes Samsung. And that's pretty much it.

NEVER trust Chinese brands. OnePlus, Oppo, Vivo are all the same company. Even Motorola is Chinese.

Gangadhar hi Shaktiman hai

 

[resjudicata]

@%CE%A3%CE%B1%CE%BC%CE%BF%CF%85%CE%AE%CE%BB I regret not switching off online transactions for parents.

RBI has now mandated compulsory switch off of online transactions if never used earlier. You should ensure that the account/debit card/credit card is disabled for online debits.

I use .. don't laugh.. Samsung.

It has a secure (hidden) folder which is isolated from the main phone.. Knox. All financial apps/identity sensitive apps like digilocker are installed via different playstore log in. Separate Password/finger print required to access the folder.

And passwords are 14 digits.. alpha numeric special character managed thru a password manager.

 

[gash]

@%CE%A3%CE%B1%CE%BC%CE%BF%CF%85%CE%AE%CE%BB If bloatware is an issue, then consider Motorola phones. They give a near-clean Android experience.

Google also has a program called "Android One". https://en.wikipedia.org/wiki/Android_One

Several phones, from several manufacturers, are available under this label.