All the eggs in one Basket

Based on the previous post some of my friends have given their inputs to me. While it is only one side of the story that some people may not be repaying their borrowings on time it is also possible that banks using their muscle power are harassing the customers.
One of my young colleagues credit card was lost and he immediately called the bank but by that time some body has done shopping worth 10000 Rs on the card. Initially the bank said that they are looking in the matter and will revert back to him. But they kept on adding interest and other charges on the card. So soon the sum owned on the card was more than 25000/ in around 6 months. ( I do not have the exact calculations with me but that is not the point here).

My colleague has been constantly following with the bank and also has sent a few emails to the bank. One day he received collection calls from the bank goondas that if he does not make the payment in next 48 hours he will have to bear the consequences. He tried to explain things to them that he has been proactively following with the bank and the matter is a disputed one. But they were not willing to listen to him. Next thing he knows is that on receipt of salary his account was frozen and he was unable to withdraw any money.

This led to:

1. Him being without cash.
2. His EMI check bounced
3. He could not make payment to his landlord for the rent

Basically his whole life was in a turmoil this when as per him he is not even at fault.

The bank was able to do so because he had the credit card of the same bank from where he had salary account and all his money was in this single account for EMI, for cash withdrawals and other expenses.

Basis this here are my recommendations even if your accounts are in perfect condition and there is no dispute.

1. Never put all your eggs in one basket which means you should have more than one banker.
2. Never use the credit card or loan facility from the bank where you have salary account. Now a days if you have a decent salary you can easily get credit cards from almost any bank except for may be American Express. This way even if there is a dispute with the bank either due to your fault or banks fault or due to some body else's fault your salary account will not be put on freeze and your life will not suddenly come to a stand still.
3. Always keep some emergency fund in some other bank account preferable a PSU bank ( good old SBI or PNB or BOB or IOB types) so that if there is a issue with the primary bank account you can fall back on this emergency account and your life will not come to a standstill all of a sudden. In fact in the current scenario you should seriously look at both your primary and emergency account to be with PSU banks)
4. Keep a small amount of cash at home which should be used in emergencies.
5. For those who are extra cautious may not want to keep any money in your Salary account and may want to transfer it immediately to some other account.


Whatever strategy you may choose the important thing to remember is that do not keep most of your money in account of a bank whose Credit card also you use. As due to any reason if your CC goes into default the bank will be able to freeze your account and take money out of your account leaving you high and dry. Is this legal? Well you may have to read the fine print to find out if the bank can do it or not from your terms and conditions for the credit card.