How to manage your bank manager

There's a right way and a wrong way to deal with this very important person in your life. John Andrew has some tips on saving money and avoiding embarrassment
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The Independent Culture
One Saturday morning a few years ago I was so incensed with a letter I received from my bank that I immediately wrote a cheque for the amount of my overdraft and popped it in the post with a letter to head office. I hasten to add that the cheque was drawn on my account at a different bank! The accompanying message was quite simple: either I operate the account within the bounds agreed in the way in which I want to, or the account is closed.

The account had been opened some 12 years previously as a secondary banking arrangement. I explained why I wanted it and how it would operate. Basically it was to be used to finance additions to my antique collection. Dealers and the auction rooms always seemed to have objects which I liked when funds were on their way but still awaited.

What I wanted was a sizeable overdraft. It was explained that funds would be paid in irregularly when cash was available from my secondary income. It was unlikely that there would be "swings" on the account. Bankers like to see balances on current accounts fluctuate regularly. However, my request was granted and the account worked to everyone's satisfaction.

That is, until a new manager arrived on the scene. He could certainly have benefited from a course in letter-writing: his tone was positively offensive. Noting that the account had progressed over two months from a small credit balance to an overdraft of pounds 2,000, he was concerned. It was not the amount (the limit was pounds 10,000) but the fact that during this period I had not paid anything into the account which was causing him to have palpitations.

The matter was quickly resolved. The bank's head office sent a grovelling letter of apology with the assurance that the letter was not sent to annoy me. The new manager learnt to read customer's files before he sent Exocets in the future.

In fairness to banks, they have advanced a long way in the field of customer service during recent years. They now recognise that they are there for their customers' convenience and not the other way round. Nevertheless, there are ways of handling your bank which will not only make life easier, but will also prove less expensive. Here are a few tips:

Bankers love order. Overdraw your account without arranging an overdraft first is one sure way of rattling a bank manager's cage. It could also be embarrassing if the cheque that takes you overdrawn is bounced. To add insult to injury, they will charge you for this "disservice". However, if the cheque is paid, they get their "revenge" by charging you a penal rate of interest and possibly a penalty fee for allowing you to have an unauthorised overdraft. Way forward: Always arrange an overdraft facility if you are going to dip into the red. Not only will you avoid embarrassment, but it is less expensive.

They also like reasoned requests. One sure way of earning brownie points is not only to ask before you overdraw, but when making your request to give the reasons and the source of your repayment. In other words, if the car blows a gasket, state the exact sum you will require. Way forward: Do your homework and brush up on your presentation skills.

Banks detest anything which is not the truth. Banking is based on trust. If you are not completely honest with your bank, you run the risk of never being trusted again. Way forward: Be completely honest as to why you want the money and where the repayment is coming from. If you are in financial difficulty, say so and do not invent another reason why you want the funds or the source of repaying the borrowing.

They appreciate the whole picture. While it may be tempting to take the short-term view, be open about your position in the longer term. In other words, if you want money this month to repair the car, but also know that you will need funds for your daughter's wedding in six month's time, mention that too. Way forward: Show that you think ahead.

Operating a bank account is very similar to using a telephone. With a little thought you should be able to make more of your money. For example, if you regularly dip into the red because a standing order leaves your account a few days before your salary is paid in, arrange for it to be paid after the arrival of your salary. Also, do not leave excess moneys on the account that either earn no or a derisory rate of interest, when you could transfer the funds to a higher-interest account until needed.

Finally, remember that banks have discovered marketing. A friend who recently called at her branch to arrange a small overdraft for a couple of weeks was totally dismayed to be offered anything but this temporary facility. Remain focused until your needs are satisfied and then let your personal banker do his or her sales pitch - providing of course, you have the time or are interested.