Step #2 To Getting Rich: Banking

Ramit Sethi

You’d be surprised how much money you lose through bad banking. Here are some tricks to get you off to a good start.

Get rid of any fees: If you’re a student, switch to a student bank account with no annual fees. Here’s how the conversation will probably go:

You: “Hi, I’m a student and I’d like to get an account with no annual fees. I want free checking and no minimum balance.”
Banker: “Sorry sir/ma’am, we don’t offer those anymore.”
You: “Really, that’s interesting because (Bank of America/Wells Fargo/other competitor) is offering me that deal right now. Also, your customer-acquision cost is over $150.00 right now. Do you think you could help me now?”
Banker: “What a truly astounding coincidence. It seems my computer is suddenly showing that we can offer you a free account just like the one you asked for!”
You: “Why thank you, kind sir” (sip darjeeling tea).

There’s one thing to remember here: Banks don’t want to lose you as a customer. First of all, you’re a student–the customer group that pays the most in fees. Second, it costs an incredible amount (over $150.00) to acquire a new customer. Remember this next time you negotiate with your bank.

Get overdraft fees waived by asking. Banks are so nice. If you have a savings account and a checking account, and you accidentally write a check for more than you have in your checking account, they’ll helpfully transfer the money from your savings account to prevent a bounced check. They’ll also helpfully charge you $10 to $15, which can wipe out any interest earned from this year.

Fortunately, banks understand that people are occasionally stupid and they’ll waive your fee if you ask. This generally works the first time and is very hard after that (but can still be done if you have a good excuse). Remember: they want to keep you as their customer.

Get a credit card to build your credit. If you have strong credit, you can often get a house/car/loan compared with someone who has a lot of money but no credit history. All about credit cards.

Difference between savings and checking accounts: Savings accounts earn interest (checking accounts don’t). You should keep the bulk of your savings in your savings account (duh), where it earns interest, and only the minimum you need in your checking account. Transfer between accounts as necessary.

Set a budget: Use Quicken/MS Money/notepad to judge your expenses for 3-6 months. Then cut expenses accordingly (e.g., don’t need that Starbucks/Coke/dress/whatever every day). Once you start saving, you’ll have money to invest. The best way to start a budget.

Now what?

Do you know your actual earning potential?

Get started with the Earning Potential quiz. Get a custom report based on your unique strengths, and discover how to start making extra money — in as little as an hour.

Start The Quiz

Takes 3 min


  1. Brian

    awful nice of you to do this

  2. Adam

    If your bank does NOT have free checking then SWITCH banks. I am in banking and every bank has free checking, plain and simple. Otherwise very basic and good pointers.

  3. ed

    Also look into a local credit union and if you are a student the university/college’s credit union. Some of them pay interest on checking (though not as much as savings accounts).

  4. Joel

    Hey Ramit, this is hilarious! You recommended cutting back on Starbucks lol. I guess you started out learning from others and as you messured into an expert you changed your thinking. Now you recommend deciding whats important and saving on everything else, as well as going for big wins instead of cutting back on small stuff.

    Just came back here to see how you started out your career. I’m a fan, keep up the good work.