03/01/2013 12:23 EST | Updated 05/01/2013 05:12 EDT

Make the Bank Start Working for You

FILE - In this March 5, 2012 file photo, consumer credit cards are posed in North Andover, Mass. The rate of severely late credit card payments dipped nationally in the first three months of the year, even as banks issued more cards to borrowers with less-than-stellar credit, according to an analysis by credit reporting agency TransUnion. (AP Photo/Elise Amendola, File)

Despite the constant barrage of friendly letters and chirpy bank tellers, many people find themselves in a one-sided relationship with their bank. After the wooing stage is over, banks can become your very best frenemy. Here are the top three most common pitfalls to watch and avoid.

#1 It's just business.

The first thing you have to realize is that all banks exist to make money. That's why you are referred to as a customer the same as any other retail business. By design, they are really not there to help you; they are there to take money from you. For example, did you know that some banks use a points system for their employees, whereby employees are awarded points based on the business they achieve? The more points they accumulate the bigger the bonuses, raises or awards. I have been told by people in the industry that employees who are working with a points system often look at their clients not as people, but as numbers. As in, "How many points does this relationship represent?"

Different people within a bank or between branches can end up giving different rates on the same product for no other reason than the person you're dealing with needs a few more points for a bigger bonus. When it comes to bank fees, not all of them are negotiable but they can certainly be discussed. Bottom line: customers should look out for application fees, administration fees and my personal pet peeve, annual review fees.

#2 Misplaced Loyalty

People are often under the impression that loyalty is important to their bank. Wrong! The best rates and services are often reserved for attracting new customers, not for rewarding long time ones. There are often ads offering higher rates on deposits or lower rates on loans when opening a new account. But as a long-term customer, has your bank ever called you to say they are charging you too much interest or charging you too many fees and they are going to drop them for you? Drawing a blank, right?

When you go to a new bank, it is like a courtship. They want you to feel good about the relationship. They want to impress you so they make concessions like offering lower rates on loans or reducing fees. Once they have you as a customer, it can often turn into a one-sided relationship. You have to watch out for the signs: they can increase your rates or add new fees and in extreme cases they can reduce or take away your credit. So don't be afraid to switch banks, branches and managers. Each person has their own unique set of circumstances and deserves bank advisors who take these into account. Ask your advisor how many other clients he has like you. Ask for referrals. Which brings me to my last point.

#3 Competitor Shopping

Most people don't shop around when considering their banking options. It may seem overwhelming to think about changing banks, but here's the catch -- the banks know that too!

Everyone should be reviewing their bank statements monthly. Check all the fees and service charges. If you have a line of credit or loan, pay attention to the rates. If you have a lot of financial affairs have your accountant or financial planner review them with you. If you notice something has changed, speak to your bank about it and don't be afraid to check with another bank.

Earlier this year I asked my staff to see how many different fees and service charges they could find on our clients bank statements. To my amazement they found 34 different fees, charges, etc. I have seen interest rates below prime and as high as prime + 8 per cent, so pay attention.

Success for anyone is dependent on profitability. Profitability is a function of income and expenses. There are a lot of things you have no control of, but banking doesn't have to be one of them. Take the time to review your relationship with your bank. Speak with your branch manager if you discover you are in a one-sided relationship. If they are not able to improve your banking situation, then tell them it's just not working for you any more and get out!

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