Should you choose women-only banking products?
Posted by: Arti Bhargava on May 29, 2017, 06.30 AM IST
Rachna is a young entrepreneur in the fashion industry. As she is just starting out, banks are trying to woo her with women oriented saving accounts, special credit cards and seemingly attractively priced loans.
She is impressed with the fact that banks use extensive surveys and research to create products useful for women. Some of these offers seem rather enticing, but she is wondering if there are any issues that she should be aware of while evaluating these products. Will she really be better served by such products?
Rachna must carefully read the literature on such women-oriented products to see if there are any special benefits available to her compared to standard accounts. These could include a lower average quarterly balance requirement or addon benefits, such as concessional loans, credit cards or some form of insurance. Most importantly, these freebies should be useful. Otherwise, it does not make financial sense for her to choose that bank account.
Also, she must pay attention to the fine print as well as the terms and conditions to see whether there is a catch in terms of a limit or a precondition. In the case of credit cards, Rachna must ensure that the benefits offered (shopping coupons, discounts at eateries and supermarkets) do not come with any pre-conditions.
If a specific benefit such as a lower rate on loan for buying jewellery is offered, she must assess whether it is actually useful for her, or simply a hook to reel her in. Is that the loan she was looking for? Or would she rather take a concessional home loan, car loan, or even a personal loan. Such cards may even attract a higher issuance fee or annual fee or rate of interest than standard credit cards. If she's offered a loan for women entreprenuers at special discounted rates, she should conduct a comparative study to see whether the 'special discounted rate' is a benefit or a sham.
Similarly, for loans, it would be wise for her to see if there is a material difference in what the product offers, which would be beneficial for her. Rachna must carefully evaluate these banking products to make sure that the benefits they advertise are real and tangible, and beneficial for her overall finances, not just marketing gimmicks.
( The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.) This article appeared in Economic Times dated May 29, 2017, 06.30 AM IST