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My Job Is to Make Banks Rich: Here’s How to Avoid our Wrath

Last Updated: BY Michelle Schroeder-Gardner - 53 Comments

Disclosure: This post may contain affiliate links, meaning I get a commission if you decide to make a purchase through my links, at no cost to you. Please read my disclosure for more info.

My Job Is to Make Banks Rich: Here's How to Avoid our WrathHello! The other day Will Lipovsky from First Quarter Finance, a blogger friend of mine, approached me with a possible article for my website. The topic is something that is not discussed often, and I knew I wanted to have him contribute to my blog. Enjoy!

Bankers love preachers but hate teachers.

That’s just one of the many things I’ve learned by working with hundreds of banks across North America.

I work with bank presidents, CFO’s, CIO’s, and loan officers daily to help them make money off you. Since I know how to make banks money, I also know how to save you money. I will tell you how to avoid our wrath.

For your information and entertainment, I’ve made a list of 5 wild facts I’ve learned about the banking industry:

 

1. Act Important

If you (or someone you know) is even halfway important, use it to your advantage!

I know a woman from San Diego who overdrafts multiple times a month. Those Coach purses aren’t going to buy themselves after all. But she has no reason to worry. This isn’t a problem for her since her bank happily waives the fee every single time. It’s because her daddy is a successful businessman in town.

The bank is afraid if they don’t waive the fees, she’ll run home and tell daddy that his bank is being mean to her.

Last summer I went to a bank in Chicago to advise them. They were waiving tons of fees for one wealthy client. This guy owned planes, cars, houses, and businesses all over town. His planes were always flying to Mexico and back multiple times a month. I’m fairly certain he’s a drug dealer.

But anyway, after some investigation, all the business he was giving the bank was actually losing them money. See, sometimes bankers want you so bad; they don’t pay attention to the real numbers. They believe you’re important and assume you will make them money.

One loan officer started screaming once I revealed the real numbers:

“How could this be?! It’s impossible! Go back to your hotel and turn on the TV and all you’ll see in the commercials are this guy’s face! We can’t be losing money on someone who borrows millions from us.” I had to respond, “Well, stop waiving all his fees and giving him all those interest breaks just because you think he’s important. He’s sucking your institution dry!”

That night, his jolly face was all over my TV. Any guesses who he is in real life? It would be so much fun if I could tell you.

Moral of the story: If you convince loan officers you are important, they will drool for your business so much so that you can get the upper hand.

Related: How To Become Rich – It’s More Than Millions In The Bank

 

2. Don’t Feel Intimidated

This is especially true in small towns – a lot of bankers don’t have a clue what they’re doing. Heck, half of them don’t even know all the industry jargon.

One woman told me she told got her position because, “My dad plays golf with the president.” It’s funny every client wants to know what the other client is doing to make money. It’s like they want me to help them cheat on a test.

Bankers today need you more than you need them. People aren’t borrowing like they used to. I know farmers cash flowing their operating costs into the millions. Next time you apply for a loan, remember YOU are the important person in the room. Don’t feel intimated.

 

3. Fees & Interest – That’s It

A bank has the opportunity to make money off you by two ways: by hammering you with fees (like overdrafts) or by charging you interest. They make a bit by investing your money as their own but this is harmless to you.

So distance yourself from fees and get your interest numbers as low as possible and you’ll be pretty safe.

 

4. How to: Never Pay An Overdraft

If you get an overdraft, don’t freak out! When I transfer money from a bank account into my Vanguard investment account, I sometimes take money from the wrong bank. Honestly, I’ve done this a humiliating 5 times. Never once have I paid an overdraft though.

Here’s how…

Most banks don’t want to tick you off, so they will usually waive first overdraft as a courtesy. Just simply ask for it to be waived. Easy peasy lemon squeezy. One bank waived my first overdraft without me even asking (Ally Bank).

After that first waived fee, the bank may not be so kind. Those overdrafts are what keep the lights on at most banks. Banks LOSE money on checking accounts unless they overdraft.

I help assign costing for banks. Whenever someone walks to the copier, prints a statement, or opens a new account, I assign a cost. I put a dollar on everything. Based on a costing study, the average cost to open a checking account is $125; maintenance is $10 per month.

So right off the bat, the bank is $135 in the hole with you.

The only reason they offer that unprofitable, pain-in-the-butt product is in hopes that it will be your gateway drug. Once they have you in a checking account, they hope to soon see your mortgage, car loans, refrigerator loans, candy bar loan, and all the other ridiculous loans people seem to enjoy.

So if your bank doesn’t want to forgive your overdraft, casually mention to a bank manager that you’re looking to buy a house soon. They’ll want that mortgage.

They will treat you like a valuable customer – one who definitely deserves an overdraft to be waived – and also a steaming cup of cappuccino while they take care of, “this silly mistake.”

 

5. Bankers Stereotype

Bankers hate government workers and love farmers and car dealers. Government workers think they have job stability but it’s not the case so much anymore (thus risky loans).

Farms and car dealerships are two of the most profitable businesses across the US the past few years (along with churches as puzzling as that may seem).

As I said earlier, bankers love preachers but hate teachers. Teachers don’t make much money and they’re known for being frugal.

Why love preachers? Bankers want to go to heaven. As part of my job I assign a risk code to each customer to see if they should be granted a loan (and if so, at what % interest). Most bankers, especially in the Midwest and south, get scared when I try to assign one to a preacher. They throw their hand over my keyboard and say, ‘he’s approved.”

 

So there you have it, 5 facts that will help you win with your bank.

But if after reading this article you’re still struggling… become a preacher.

 

Have you ever paid an overdraft or done any of the above? Anything on this list surprise you?

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About Michelle Schroeder-Gardner

Michelle is the founder of Making Sense of Cents, a blog about personal finance and traveling. She discusses how her business has evolved in her side income series. She paid off $40,000 in student loans by the age of 24 mainly due to her freelancing side hustles. Click here to learn more about starting a blog!

Comments

  1. J. Money says

    By far my favorite article I’ve read in a while… And I read over 200 a day while searching for RockstarFinance.com!

    Well done my man, absolutely awesome. (And you’re right – entertaining too :))

    Reply

    • Will Lipovsky, First Quarter Finance says

      Once a bank didn’t want to pay me a $150 new account bonus. It was an online promotion. They realized later I was 10 states away from their nearest branch and I would likely never give them loan biz. I reminded them that they are already about $150 in the hole with me. Should I not receive the bonus, I may as well close the account (I mentioned this politely of course). If they ever wanted to make that new account cost back, they should pay me the bonus. Yes, they would be $300 in the hole but they would at least have chance of getting money out of me in the future. They had a $150 visa gift card in the mail the next day. They should have just changed what states were eligible for the promotion.

      And lawyers get a great credit risk code, typically. It’s due to high income and how buddy-buddy they are with the loan officers. However, don’t mistake all that nonsense with real wealth. They are often pretty cash poor. No time for saving when you’re out driving your new bimmer, I guess.

      Reply

  4. John @ Wise Dollar says

    “The only reason they offer that unprofitable, pain-in-the-butt product is in hopes that it will be your gateway drug.” Lol, that is so true! Very cool William! I worked at a bank right out of college for a bit and saw a little of this, but no where near the extent you have. Out of all the financial screw ups I did in my past I never have had an overdraft, how I don’t know. Cool article sir!

    Reply

  5. Mike Collins says

    Great article! I love your idea about mentioning you’re in the market for a mortgage to get out of an overdraft charge. I bet the bank manager’s light up at that!

    Reply

  7. kammi says

    YESS!!! I argue with my bank if they even TRY to pull any of this stuff and therefore my accounts are 100 percent efficient! I’ve always been told that I look as though I am wealthy or act as such (probably because I attended a high school with the children of a LOT of wealthy people; I am going to be one day, though!) and I’ve been able to avoid a LOT of financial problems just by threatening to PULL my money out of my account. One time, I stared the banking guy in the face and asked him to give me a cashier’s check for another bank/a competitor right after he had tried to sell me on their services, and another time I stumped the entire bank when they tried to ask me about signing up for a credit card by saying “I”m not interested in that. What’s the minimum required at this branch to open a trust?”. After five people they still didn’t know the answer! It helps on surveys to give them a bad rating constantly, too, so they feel like you will pull your money out at any moment. Sad, but true but it’s fun!!!

    Reply

  8. Charlotte says

    What a great post, it’s actually funny how banking has such a personal element when you break it down like that. I have a few friends that work in banking and they also have some entertaining stories like that. Good job, Will!

    Reply

  9. Lauren says

    This was fascinating! Love getting the inside scoop like this. I’m happy to say that my bank has only ever lost money on me, because I have never overdrafted or gotten hit with fees- woohoo!

    Reply

  12. Jason B says

    I knew most of this info I worked at a bank for almost 2 years. Overdraft fees are BIG business. The way they handled some of the customers was not morally right. That’s part of the reason I left that company.

    Reply

  13. Evan says

    AMAZING GUEST POST!

    I have gotten overdrafts waived but it always leads to the question of where all my investments and cash is (as they see my paycheck but notice most of my money going out to ING/Capital one or Fidelity). Fantastic loss leader, but I bet that was different 25 years ago when there were account fees, minimums etc.

    Reply

  14. Daniel says

    Not going to lie, as a student in seminary right now working towards becoming a pastor, I enjoyed this article. Maybe easier loan approvals will help make up for all the debt from seminary!

    Reply

  15. talkcarinsurance says

    This is a great article. You can actually get an overdraft with many banks and account types. I have $1,000 overdraft facility with my account. I asked nicely to my bank manager to get it. You really need to talk to right people in the bank especially if you need a loan. You can get away with a large loan for a business that doesn’t make much sense as long as you have a good brick and mortar value and good at accounting and and stacking up numbers. It is surprising how much banks love number crunching and projections. It is even more surprising that most people work in the bank aren’t good at reading them.

    Reply

  16. Christine Berry - Wealth Way Online says

    Great tips! I tend to avoid fees and am a wimp about complaining about anything – a parking ticket, bank fees, whatever. But I think I’ll resolve to be more persuasive 😉 At the end of the day, rarely do the employees dealing with the complaint actually benefit from you paying it personally so I think that makes it easier.

    Banking is one of the reasons I wish I lived somewhere like the US. I’d love to get into points hacking etc, but there’s really not much offered here in NZ.

    Anyway! Loved this post with “insiders” advice! 🙂

    Reply

    • Will Lipovsky, First Quarter Finance says

      Hey, Christine!

      I think what helps when dealing with these situations is just to flat out be kind to the person. Show respect for themselves and their position. Don’t make the situation all about yourself. Let them talk so they feel their words matter.

      And I think you’re right about at the end of the day, the employees don’t really get hurt by helping you out. They don’t have much to lose compared with what you have to gain. Even if they would get a tiny slap on the wrist, they will remember your kindness. That will soothe the pain.

      Reply

  17. debt debs says

    I agree, fantastic post! It’s always great to get an insider’s perspective. I was talking to a woman yesterday that I met at a wedding shower who was in the banking industry for 30 years. I got some tips from her as well. She said that banking has changed a lot and pretty much everyone, including the tellers, have quota to sell product or get appointments booked so someone can sell you a product.

    Reply

    • Will Lipovsky, First Quarter Finance says

      Thanks for the compliment!!!

      Yeah… sell sell sell is the name of the game anymore. I knew an 18-year-old teller who was freaking out because if she didn’t open 20 more accounts per month she may get fired! She was having to hit up people off the clock to fill the quota.

      Thanks again for the kind words!

      Reply

  18. Free To Pursue says

    Excellent post Will. One of the best I’ve read so far this year.

    You’ve certainly identified the costs of scarcity (specifically in terms of money & status, that is). Here are my Coles notes from your post:
    1. The bank only gives you money with good terms when you don’t need them. It’s the quintessential dysfunctional relationship.
    2. If you don’t need money, you are likely to be more confident in your approach with a banker (be it based on your reputation, net worth, celebrity status, standing within the community, etc).
    3. When you don’t have money, assets, or a decent credit score, it’s hard to negotiate.
    4. Checking accounts are loss leader marketing. Did not know that! Regardless, chances are people who can ill afford it are the ones paying the fees because they offer little other upside for bankers.
    5. No one has greater status than the “Big Guy”. Period. I definitely had to LOL when you commented on government workers. Priceless!

    Thanks for the brain food.

    Reply

  20. Broke Millennial says

    Haha, this is great. I’ve actually never gone overdraft but have started doing a ton of research about overdraft fees for my new job. Internet-only banks are pretty much the bomb because a lot of them (like Ally you mentioned) don’t charge insane fees like the brick-and-mortar branches. I know I’ll probably go overdraft one day as a simple mistake…don’t we all?

    Reply

    • Will Lipovsky, First Quarter Finance says

      Thanks for stopping by! High overdrafts are outrageous. I know plenty of brick-and-mortar banks that charge $30-$40 per overdraft although it typically cost them approx. $1. I’ve heard all that extra referred to as ‘fun money’ since it often becomes the end of year bonuses.

      Online banks for the win.

      And I’m sure you could add a ton to this article given your new position. Congrats, by the way!

      Reply

  21. Justin @ Root of Good says

    I don’t pay bank fees. I’ll call and get them waived. So far I’m batting 1000. Late fees on credit cards, overdraft fees, insufficient fund fees, all kinds of things. Playing the traveling hacking game leads to the rare mistake, but you just have to ask for forgiveness.

    The only exception is my local credit union. They’re pretty awesome, so I don’t complain if I have to pay their overdraft fee. It’s $0.50 for the third overdraft (the first two each month are free). I consider it a donation for my stupidity.

    Reply

      • Justin @ Root of Good says

        Yeah, it’s a stupid tax on me!

        What a timely article. I just realized Fifth Third hasn’t received my last payment yet so the bill is overdue. Guess I’ll be calling to get the fee waived and any interest due waived as well.

        This is shocking but Fifth Third does not have a way to pay your bill online. Needless to say I would not recommend them as a credit card company (or bank, for that matter) unless you like 20th century-style pre-internet banking. At least they offered me a $550 sign up bonus to make the hustle worth while.

        Reply

          • Justin @ Root of Good says

            I know. $550 for mailing in a check a few times and dealing with “lost in the mail” checks? Sure, why not. And now I know I will never use them for a credit card ever again (unless they offer a ridiculous sign up bonus). So that’s something else I gained from this experience. Knowledge!

            Reply

  23. Chris @ Flipping A Dollar says

    This is good stuff and spot on.

    I accidentally overdrafted using PNC because they give you two checking accounts as part of their “awesome” (read: stupid) virtual wallet system. I don’t keep any money in the one, but when I transfer money to my landlord for rent, this unused checking account is automatically chosen in the pull down box. I have to remember to change that box every month twice (our rent is higher than the limit max transfer).

    Anywho, one month I forgot to choose the correct account on one of the monthly transactions. When I got nailed with a $35 charge, I moved the money over to cover it and kindly let them know that I’d like them to remove it. They did. First time I had an overdraft in ~6 years of this account.

    If they tried to get me again in the future, I’d probably threaten with removing my money. I’m not too tied to them since interest rates are so low!

    Reply

    • Will Lipovsky, First Quarter Finance says

      That’s true, Chris. No one should stick with a bad bank just because of their checking account interest rate. Everyone’s rates are terrible so may as well choose a bank that treats you right.

      Are you doing a direct transfer between your landlords bank account and your own? Popmoney may be easier.

      Thanks for reading!

      Reply

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