Ever feel like your bank isn’t really on your side? You’re not alone. Banks are businesses, and like any business, their goal is profit. And sometimes, that profit comes at your expense — through financial products that sound helpful but often hurt you in the long run.
Let’s talk about five financial products banks push that you should avoid — and why they can quietly drain your hard-earned money.
1. Credit Card Protection Plans
Sounds like a safety net, right? Wrong. Banks love selling credit card protection plans with promises of covering your bills if you lose your job, fall sick, or face an emergency. But the reality? These plans often come with high premiums, confusing terms, and tons of exclusions.
Imagine this: You think your bills are covered because you paid for protection, only to find out your specific situation isn’t eligible. Plus, most people already have insurance that covers job loss or health emergencies. This is just a costly duplication.
What to do instead: Build an emergency fund. It’s cheaper and more reliable.
2. Endowment Insurance Policies
They sound like a smart investment with guaranteed returns — but they’re not. Banks push endowment plans as a mix of insurance and savings, but they deliver poor returns and high costs. Your money gets locked in for years with returns barely beating inflation.
A friend of mine fell for this: She was promised a secure future, only to realize the “guaranteed” maturity amount was far less than she could’ve earned through a simple mutual fund.
What to do instead: If you need insurance, get a pure term plan. For investments, choose mutual funds or fixed deposits based on your risk appetite.
3. Savings Accounts With High Minimum Balances
Why should your own money cost you money? Some savings accounts require you to maintain a high minimum balance, and if you don’t, they slap you with steep penalties. It’s a sneaky way for banks to make easy cash.
Ever forgotten to maintain that balance? The fines add up faster than you’d expect.
What to do instead: Choose a no-frills savings account with no or low minimum balance requirements.
4. Investment-Linked Insurance Plans (ULIPs)
A two-in-one product sounds efficient, but it’s not. ULIPs combine insurance with investment, but they come with high fees, complicated structures, and average returns. Banks earn hefty commissions on these, so they push them hard.
Here’s the catch: Your money gets split between insurance and investments — and neither performs well. The fees eat into your returns, and the insurance coverage often falls short.
What to do instead: Keep insurance and investments separate. Get a term insurance policy and invest in index funds or SIPs.
5. Pre-Approved Personal Loans
Quick cash feels tempting, but at what cost? Banks often offer pre-approved loans without background checks. They know you’re likely to take the bait because it’s easy.
But the interest rates? Through the roof. These loans come with high EMIs and long repayment periods, dragging you into a cycle of debt.
What to do instead: Only borrow when absolutely necessary. Compare rates and terms from multiple lenders before deciding.
Final Thoughts: Be Smarter With Your Money
Banks aren’t evil — but they are businesses. They offer products designed to maximize their profits, and sometimes that means they don’t have your best financial interests at heart.
So what’s the solution? Stay informed. Ask questions. Read the fine print. And always, always prioritize your financial well-being over convenience.
