The best way to Beat the Banks in Their Personal Sport (and Put together for a Wealthy Life)
The bank you have – probably the big bank in your neighborhood – is most likely a big rip off with fees and minimums you don’t have to pay.
Banks love average customers because we don’t really want to switch banks and they think we don’t know anything better about things like monthly fees and overdraft protection.
But after reading this post, you will see how easy it is to beat the banks at your own game. As long as you’re not too lazy to switch banks (which takes less than a week).
I will show you how to choose the best bank and accounts so that you can earn the maximum amount of interest.
Your checking account is the backbone of your financial system. This is where your money is deposited first before it is “filtered” into different parts of your system, e.g. B. in your savings account, your investment account and your debt-free expenses.
Checking accounts allow you to deposit and withdraw funds using debit cards, checks, and online transfers.
Ramit has said that he looks at his checking account like an email inbox: all of his money goes into his checking account, and then he regularly divides it up between appropriate accounts. Things like saving and investing with automatic transfers.
Checking accounts are the number one place to get unnecessary fees and we’ll fix that by applying the information in this post.
Think of savings accounts as places for short-term (one month) to medium-term savings (five years). You want to use your savings account to save up things like vacation and Christmas gifts or even longer term items like a wedding or the down payment for a house.
The main difference between checking accounts and savings accounts is that savings accounts technically pay more interest.
I say “technical” because, on a practical level, the interest on your savings account is essentially meaningless.
Do you need a checking account AND a savings account?
The main practical difference between checking accounts and savings accounts is that you regularly withdraw money from your checking account, but rarely withdraw from your savings account.
Checking accounts are set up for frequent withdrawals: they have debit cards and ATMs.
But your savings account is really a target account where every dollar is allocated to a specific item that you are saving for, such as a dollar bill. B. a house, vacation or emergency fund.
This is where Ramit’s advice becomes difficult.
He recommends two different accounts with two separate banks.
Here’s why: having your money in two separate accounts – and banks – will keep your psychology growing with the help of psychology.
A basic view is that you are depositing money into your savings account while you are withdrawing money from your checking account.
In other words, if your friends want to go out on Friday night, they won’t say, “Wait a minute, guys, it takes me three business days to get money into my checking account.”
If you don’t have the money in your discretionary account (checking account) because you spent your bargain, you know.
Having a separate savings account forces you to keep your long-term goals in mind instead of just blowing them away for a few rounds of drinks.
Here’s a video by Ramit explaining how you can further automate your finances:
Finally, Ramit found that banks trying to offer checks, savings, and investing tend to be mediocre on all of them. You should want the best checking, savings, and investment accounts – no matter where they are.
3 options for the perfect account setup
Rather than following the recommendations of which banks to go with, it is best to take a look at the bigger picture first so you can choose the best accounts for your personality and values.
1.Most basic option (good for most people)
A checking account and a savings account at a local bank. This is the bare minimum. Even if you already have these accounts, speak to your bank to make sure you aren’t paying any fees.
2nd basic option + small optimization (recommended for most people)
This option means opening accounts with two different institutions: a toll-free checking account at your local bank and a high-priced online savings account.
With the current account you have immediate access to your money and can transfer money to your high-interest online savings account free of charge. You can also deposit cash at your local bank.
If you already have this setup, great! Just give us a call to make sure you’re not paying unnecessary fees.
3. Advanced setup + full optimization (perfect for people who read things like Lifehacker and The 4-Hour Workweek)
This facility consists of maintaining multiple checking and savings accounts with different banks to typically get most of the interest and services that different banks have to offer.
For example, Ramit has an interest-bearing checking account with one online bank and a savings account with another online bank. Although you can set up automatic online transfers, multiple banks means multiple websites, multiple customer service numbers, and multiple passwords.
Some people find this too complicated – if you are one of them stick to a more basic setup unless you are very keen to fully optimize your bank accounts.
Optimize your bank accounts
Regardless of whether they are accounts that you just opened or accounts that you already had, you need to optimize your checking and savings accounts.
This means that you should pay fees or minimum fees.
The key to optimizing an account is to speak to an actual customer service representative in person or over the phone. That means you actually have to pick up a phone * gasps *
(And if you have a bad habit of falling victim to overdraft fees, this post will help)
Avoid monthly fees
Perhaps this is too demanding, but if you borrow your money from a bank you should probably not have to pay any additional fees.
Think about it: if your bank charges you a monthly fee of $ 5, it will wipe out all the interest you earn.
If you already have an account with a bank that you like but that charges a monthly fee, try to get them to forego it. You often do this when you set up a direct deposit that your employer can use to deposit your paycheck directly into your account every month.
Banks will also try to deceive you by demanding “minimums” which refer to minimums that you must have in your account to avoid fees or to get “free services like billing”.
These are BS.
Imagine if a bank requires you to keep $ 1,000 in their low interest checking account. You could make twenty times as much investing it.
If you can’t make a direct deposit because your job doesn’t offer it, or if you can’t get the bank to forego a “minimum”, I strongly recommend switching to a high yield online account that doesn’t charge any fees there are no minimum requirements.
To make this process as easy as possible, you can check out my blog post on Saving $ 1,000 in a Month to see how my bank fee waiver script is waived.
What’s next after optimizing your accounts?
Optimizing your finances to beat the banks is the first step. But after you have this system in place, it is time to take the next step in building your rich life.
The next step is to make more money. But that is easier said than done.
Fortunately, I’ve put together my BEST advice on how to make more money from the comfort of your home.
To get the free document, just click the link below.