What are 10 things that banks don’t want you to know which could cost you money?

[00:00:00] Ralph Estep, Jr.: Have you ever wondered what secrets banks are keeping from you? I came across a great article about 10 things a bank doesn't want you to know and guess what? This was from the eyes of a bank teller.

[00:00:10] Ralph Estep, Jr.: And it's a great article. I want to discuss it on today's show. I'm going to show you how these hidden things can dramatically impact your banking relationship, and it trickles down to your personal and business finances. So join me tonight as I get into the 10, yesterday I promised five, but I'm actually going to give you ten things that the bank doesn't want you to know.

[00:00:35] Ralph Estep, Jr.: Well, welcome to the show. If you missed yesterday’s show, I encourage you to go back and take a look at it. It's all about squishing scams and those aren't those bugs that you're squished because they're annoying you. So if you missed it, you can check it out on our website, that's askralph.com.

[00:00:52] Ralph Estep, Jr.: Well, we got a great question from Linda. Linda wrote this. She said, “Dear Ralph, I've been banking with the same institution for over 20 years, but lately I'm feeling like I'm not getting the best deal. The people working in the branch seems like they're more interested in selling me products than really working to meet my financial needs. They're also so impersonal these days, I feel like I'm just a number. Are there things I should be watching out for?

[00:01:16] Ralph Estep, Jr.: How do I know if my bank is truly working in my best interest?” Well, Linda, you nailed it today. That is an excellent question and it's one of the things that many people grapple with. I deal with this everyday in my accounting practice. Both on the business and the personal side. So I'm going to shed some light on that topic today, as we talk about these things that the bank doesn't tell you. But we want to talk about those things today.

[00:01:41] Ralph Estep, Jr.: Well welcome, I want to thank you for joining me on your journey. You know, you've got a limited amount of time, so I really appreciate the fact that you've taken time to listen to the show. It's Wacky Wednesday! Now I'm not going to get too wacky today because we're going to be talking about ways to save you money, about things that you didn't know about at the bank. So one of the things I'm going to do right now is I'm going to encourage you to go to our website again, that's askralph.com and check it out.

[00:02:04] Ralph Estep, Jr.: If you find that you're getting value from the show, I encourage you to share it with somebody else. So go to askralph.com. Well, let's get right into it today.

[00:02:16] Ralph Estep, Jr.: Well, let's start with a word from scripture. You know, I always like to get started with something to give us some grounding, and this comes to us from Proverbs 22:7. It tells us this:

[00:02:26] Ralph Estep, Jr.: It says, “The rich rule over the poor and the borrower is a slave to the lender.” Now, what does that mean? You might be saying, “Ralph, that's a rough way to start the day.” But this first reminds us of the importance of financial wisdom and truth be told there's powerful dynamics at play in our monetary system. We're going to talk about that today.

[00:02:50] Ralph Estep, Jr.: So let me jump right to it. There was an article written by her name is Laura Beck. It appeared on finance.yahoo.com and the name of the article was “I’m a Bank Teller: 10 Things Banks Don’t Want You to Know About Getting Rich,” and I thought this was an excellent article.

[00:03:05] Ralph Estep, Jr.: I'll put a link to it in the show notes. But I wanted to break down what she talked about in this article. And listen, I'll tell you my story a little bit later, about how I used to be a credit union executive. But if you wanted to know what's really going on in a bank or in a credit union, ask the teller.

[00:03:19] Ralph Estep, Jr.: So this is a fantastic article from the perspective of the people who really know what's going on. Because guess what? The people on the upper floors of the banks and the credit unions. They might know what's going on. But the people in the trenches, those tellers? They really know what's going on. And the first thing she mentioned here is read over everything. Yeah, I'll say that again.

[00:03:38] Ralph Estep, Jr.: Read over anything and everything. And she said you can't stress that enough. You got to always read the fine print. When you're setting up a bank account, they're giving you all kinds of stuff to read. I don't think anybody actually takes the time to read it. But you got to realize with any account you're opening, you've got to understand the terms and conditions.

[00:03:57] Ralph Estep, Jr.: That's a legal binding document. And if you sign it, you're agreeing to it. So if something doesn't make sense, ask questions. It's your money. You're setting up this relationship with the bank. You got to understand what's happened with it.

[00:04:10] Ralph Estep, Jr.: Now, the second thing she talks about is something I learned the hard way, and it has nothing to do with banks, but trying to close out an XM satellite radio account. They make it difficult, but what she says here in the article is so true and that's closing accounts isn't always easy.

[00:04:24] Ralph Estep, Jr.: You know, you think if you open a bank account, it's pretty simple to close it. Like just walk in there, withdraw your money and walk away. But she puts in here and I'm a quote, it says, “But some banks require you to come in person, fill out forms or even pay a closing fee.” And here's the problem she alludes to this.

[00:04:40] Ralph Estep, Jr.: If you've got any kind of automatic payments or deposits set up, you need to change those first, or you're going to get nailed with fees. So again, closing the account isn't easy, but make sure you're doing it using the right steps. And here's what I thought was powerful. She says this: she says free checking

[00:04:56] Ralph Estep, Jr.: isn't really free. You know, I think my grandfather used to say that, you know, why not? Nothing in life is free. So what she says here is be careful with free checking accounts. That's the truth. It's not free. First of all, usually, when you look under the hood, you read that fine print we talked about earlier.

[00:05:13] Ralph Estep, Jr.: There's some hidden fees in there. Maybe there's a high minimum balance. So again, I'm going to tell you, read the fine print so you know what you're getting into. I don't know how many times I've had business clients that didn't read the fine print. They got their bank statement, and there’s a huge fee on there because, oh, they went over the number of checks, or they went over the number of deposits. Another thing she says here is credit unions save you money on loans.

[00:05:36] Ralph Estep, Jr.: So this is a great time to tell you about my story. Now, when I was right out of college, I got a job interview with one of these big commercial banks here in Wilmington. And I'll tell you what, man, it was great. They took me for an interview. I saw this beautiful building, you know, they promised me a big corner office, and I was just getting started. But they were really looking for accounting professionals.

[00:05:57] Ralph Estep, Jr.: And, you know, they talked about how fantastic the work was here. They had a great salary, you know, great benefits—all of those things. But then, in the interview, they started to take a turn a little bit. They started talking more about, you know, were you comfortable selling stuff? Were you comfortable promoting our products?

[00:06:13] Ralph Estep, Jr.: And I said, oh, wait a second. And I thought to myself, do I really want to be a salesman? That really wasn't what I was trying to do. So, I continued looking for a new job, and I came across this article, you know, this one ad for a job at a credit union. And to be honest with you, I had no idea what a credit union even was. So I went to this interview.

[00:06:34] Ralph Estep, Jr.: I remember walking in the door; they had a big double door thing where you go in a front door, and they have a panel up on the sidewalk of all the executives of the credit union. And the board of directors. And I look at the board of directors, and the first guy listed there is George Bush.

[00:06:46] Ralph Estep, Jr.: I'm thinking, wow, I'm going to be working for the president. At the time, I guess he was the ex-president. Well, obviously, it wasn't the president—just another guy named George Bush. But really. So, I went in, did that interview, and I found that, you know, there really is a difference with working at credit unions, and that's all I work with now.

[00:07:03] Ralph Estep, Jr.: So if you've got the option, if you've got a credit union that you can work with, you're better off. And like she says in this article, a lot of people don't realize that credit unions often have better rates on loans and mortgages. And that's the truth. They are non-profits. We used to say when I was there, we're not for profit. Our sole focus was to help our members. But that's the truth.

[00:07:23] Ralph Estep, Jr.: So if you're going to get a loan or open up a bank account, check with your local credit union. Well, let's move on to what else she says here in the article. And that is you have no overdraft protection. This is so very true. It says right here, banks make it sound like overdraft protection is doing you a favor, but it can be really expensive.

[00:07:40] Ralph Estep, Jr.: That is the truth. Like, I've seen this with my own clients. Most of the time, it's not as simple as, "Hey, you know what, Ralph, you overdrawn your account a little bit. We see you've got this savings account over here; we'll go ahead and move that money over." Well, it's not that easy. Most of the banks now are charging $35 to make sure your transaction goes through when you don't have enough money. So that's the thing: if you don't want to get hit with those fees, they don't tell you this either.

[00:08:05] Ralph Estep, Jr.: You've got to actually contact the bank and opt out of that, so that you don't get nailed with those fees when your balance is low. Well, let's move on to the next thing. The next thing she says here is savings rates shift overnight. This is something a lot of people don't understand. They lock into that bank.

[00:08:20] Ralph Estep, Jr.: You know, they've had that relationship. Like the person that wrote the letter today said, you know, they'd been with the bank for 20 years. How many times do you look at what interest rate they’re paying? A lot of times you just set it and forget it. So that's where you want to take a look at what the bank has to offer,

[00:08:34] Ralph Estep, Jr.: what the credit union has to offer, and look for ways to make your money grow. Maybe that's opening a high-yield savings account or a money market account. I see so many people just park that money in a simple savings account, or even worse, they park that money in a checking account that's paying zero interest.

[00:08:51] Ralph Estep, Jr.: So you have options. If you're not using those options, you're losing money. Another thing, and I did a show about this a week or two ago, and that's debit cards hold up your money. This is the truth. If you go and use your debit card at a gas station or a hotel or a car rental, the company might put a hold on your account for more than you actually spent. Now, I understand why. Like it says in this article, this is to protect them in case you spend more. But here's the thing: you need to understand that it ties up your money.

[00:09:19] Ralph Estep, Jr.: And I don't know how many times when I was working at a credit union, I would see a member use their debit card, and the next thing you know, they had a check presented and over drafted their account because a hotel or rental car agency had put a hold on their account. So you've got to be aware of that. I'm not a big fan of using debit cards.

[00:09:37] Ralph Estep, Jr.: as I mentioned in the last show. And I'll put a link to that show in the show notes so you can have it. Here's another thing you might not know, and that is banks might share your info. Listen, we live in this age of digital data. If you go to the DMV, guess what? They're sharing your information.

[00:09:52] Ralph Estep, Jr.: If you open up an account at a bank, a lot of times you need to read the fine print. It says that they are able to share your information with third parties. Now, how many times have you been sitting at home, you go out to the mailbox, open it up, and you just opened up a new account at the bank?

[00:10:08] Ralph Estep, Jr.: And next thing you know, you've got offers for this and offers for that. It's a ton of junk mail, and you've got to read the fine print because most banks will give you the option to opt out of that. So that's something you want to look at. Here's another thing she mentions in the article, and I'm kind of on the fence about this one, but she says paying off loans early.

[00:10:25] Ralph Estep, Jr.: isn't always smart. Now, what she's getting at here is, if you think you're paying off a loan early because it's a good thing—because you paid it off, right? It shortened your payment history. Well, that's good and bad. Yes, financially, it's going to save you interest, but it also cuts into your credit score because you don't have that longer credit history.

[00:10:45] Ralph Estep, Jr.: So I'm going to leave this one out there for you to decide. It really depends on the individual circumstance. And the last thing she mentions here is coins add up. Now, this one cracks me up because when I worked at a credit union, we had one of these big coin-counting machines. This thing was massive.

[00:11:01] Ralph Estep, Jr.: I remember the teller would roll it out on certain days of the week, and this thing probably weighed, I don't know, it was on wheels, weighed a couple hundred pounds. And the thing you need to understand is a lot of banks will charge you for bringing in your change, but what you don't know is that they're actually making money on that because, guess what? If they've got to order change from the Federal Reserve, you know, their money deliveries—a lot of people don't understand the backside of that.

[00:11:26] Ralph Estep, Jr.: I've been in that realm, and I worked at a credit union as an executive, so I know how that works. So the banks are actually being charged to bring in that change if they're bringing it in their nice wrappers. But if you're bringing it in for them, putting it in their machine, not only are they charging you, but they're also saving money.

[00:11:44] Ralph Estep, Jr.: So look for opportunities to do that for free. A lot of local credit unions here in Delaware actually offer that service for free. So you might be asking, “Ralph, why in the world does any of this matter to me?” Well, it matters because a lot of people, as the writer of the letter today said, you know, they've been with their banks for 20 years.

[00:12:03] Ralph Estep, Jr.: They don't ever think about this. So what are some ways you can save money? I want to give you a couple of actionable steps. I'm actually going to give you five of them. The first one, and this is one that I see every day in my accounting practice: you've got to review your bank statements carefully.

[00:12:18] Ralph Estep, Jr.: Look at those recurring fees and question them. I've had clients that did not even realize that they were getting charged monthly fees of $10, $20, $30, $50. I actually had one client that wasn't paying attention, and their banking fees were well over $150 a month. That's just money out of your pocket. It's $1,800 a year.

[00:12:39] Ralph Estep, Jr.: That's huge. Number two, consider switching to a credit union. You know my bias. I think credit unions are just better options. I think they're more member-sensitive. They're more interested in the individual member because the truth is, if you go into most commercial banks today, the only thing you're going to see is a salesperson.

[00:12:56] Ralph Estep, Jr.: They don't even have tellers. And some of them even charge you for tellers. I was amazed to find that out. One of the local banks, I was looking at their prospectus, you know, their schedule of fees, and they actually had a fee if you wanted to talk to a teller. I'm thinking, that's insane. You want me to do business with your bank,

[00:13:12] Ralph Estep, Jr.: and you're going to charge me for doing business? Well, of course, we all know why. They want you to use that ATM machine. They want you to use electronic service things. I get it. But to charge me to talk to a bank teller—that's insanity. Another thing people don't realize is you can negotiate with your current bank. They may be willing to waive fees.

[00:13:31] Ralph Estep, Jr.: They may be willing to reduce interest rates. I know when I worked at the credit union, the president of the credit union—his name was Tom—and I had a really good relationship. This was back in, I want to say, it was, let’s see, 1997, 1998. Interest rates were kind of in flux.

[00:13:47] Ralph Estep, Jr.: We had a big bank in town called MBNA, and they were really growing their credit card portfolio. And they were just trying to get as many deposits in as possible so they could lend that money out. So one of the things that Tom did is he went to our board, and he was given the authority to negotiate CD rates.

[00:14:02] Ralph Estep, Jr.: So if you came in off the street, you were one of our members, and you were looking to renew your certificate of deposit, you could actually go to Tom and negotiate a better rate because he wanted to keep those funds deposited with the credit union, as compared to you taking them to one of these big commercial banks.

[00:14:17] Ralph Estep, Jr.: Another thing a lot of people don't know about—you can ask to have in-network ATMs used. They're not going to charge you fees, but you can also ask that your bank reimburse you for ATM fees. This is insane, but I see this on a lot of customers' and clients' statements that I deal with almost on a daily basis.

[00:14:35] Ralph Estep, Jr.: They're getting charged. They're charging you to take your money out of their bank. So think about this: you're paying a monthly service fee to be a member of the bank, then they're charging you to take your money out. If you're meeting with a teller, they're charging you another fee. This has gotten insane. And the last thing I'm going to recommend you do is set up account alerts. These account alerts, instead of getting charged with that $35 fee, a lot of these banks and credit unions will actually let you set up what I call a low-balance alert.

[00:15:03] Ralph Estep, Jr.: That's something you definitely want to do so that you can avoid those overdraft fees. Remember this: your bank should be working for you. It shouldn't be the other way around. So don't be afraid to shop around and find an institution that aligns with your values and financial goals. Now, before we wrap up, I just want to take a moment to acknowledge that

[00:15:20] Ralph Estep, Jr.: today is September 11th. And it seems like it was so long ago, but on this solemn anniversary, I want to remember the thousands of Americans who lost their lives in those terrorist attacks in 2001. Their sacrifice reminds us of the preciousness of life. And it reminds us of the importance of coming together as a community. And it feels like today we've lost that.

[00:15:40] Ralph Estep, Jr.: It seems like it's been so long ago that people have just forgotten about it, but I want to encourage you—let's never forget the courage and the resilience shown on that day and its aftermath. This was a time for us to come together as Americans, and I'm going to encourage you all to think about today. Put in a little bit of time, a few minutes of quiet, and just think about the sacrifice on that day.

[00:16:00] Ralph Estep, Jr.: Well, today we uncovered 10 things that banks didn’t want you to know from the perspective of a teller. So I'm just telling you right now, there might be better options out there. I gave you some actionable steps for ways to save you money. Remember, as I always say, knowledge is power when it comes to your finances.

[00:16:17] Ralph Estep, Jr.: Now, on tomorrow's show, we're going to be tackling another crucial topic. I got a question from a listener, and he wanted to know, is life insurance taxable? It's a very common question. So I'm going to answer that on tomorrow's show. Now listen, if you're feeling overwhelmed by your financial situation and you're looking for somebody to really help you, I can provide you expert guidance.

[00:16:35] Ralph Estep, Jr.: I can help you reach your goals. And all you've got to do is schedule an appointment with me. You can do that right at askralphpodcast.com/store. And I do charge a $150 consultation fee, but I'm going to tell you right now, if you do that, you will get three times the value because I can work with you. I can help you improve your financials.

[00:16:54] Ralph Estep, Jr.: I can help you boost your business. I can help you grow your business. I can help you create that personalized financial plan to achieve your financial goals. So listen, don’t wait to take control of your financial future—schedule today, and let's create a roadmap to success together. Remember this: my passion is to help you achieve financial success.

[00:17:13] Ralph Estep, Jr.: That is why I do what I do. That's why I sit down in front of this microphone every day. I want to help you get ahead. I want to help you master your finances. I want you to live out your dreams, and I want you to grow in your faith. And I know that working together, we can master your finances from that Christian perspective. So, as I always end the show, I want you to stay financially savvy, and may God bless you.

[00:17:35] Ralph Estep, Jr.: And God bless America on this September 11th.