Do you remember when you opened up a brand new account at your bank? Now, do you remember what they gave you afterwards?
Yep, we all walked away with a sucker! Not even a lollipop, it was a cherry sucker.
My perspective on banks got blown away today. We listened intently during our real estate “insider’s summit”, and came out with transformed views on Bank of America, Chase, and all our other financial institutions. As we grow up, we were all taught to SAVE, SAVE, SAVE. We’re all suckers. Putting money in my piggy bank since I was a kid, I’ve been guilty my entire life. As an everyday consumer, this was all that I knew.
Now, a principle we learned requires a shift of our normal thought. Banks have been leveraging us, so we must start to leverage the bank back. It’s time to put an INVESTOR hat on and not a consumer hat. Remember, banks are businesses; they are in it to make money, so they want us to deposit our money with them. They borrow at a low rate (your Checking, Savings, CD’s) and then lend at a much higher rate (various loans, mortgages, etc.). What’s your money doing for the bank vs. doing for you? 0.5%? 1.25%?
Here are some tips banks don’t want you to know to increase your credit score to start leveraging them:
- Raise your credit limits now – It’s super easy to just call your credit card companies, and ask them to raise your credit limit. The people in the crowd that have already done this got from $10,000 – $90,000 increase by spending just a few minutes on the phone. Imagine what you can do with those extra funds? More on that later. And no, it’s not go out and buy a boat, clothes, or big screen tvs.
- Lower your interest rates today – The same with your interest rates. Simply call your credit companies to lower these as well. It doesn’t hurt to ask, your mileage may vary but it works! Normal folks have gotten from 15% down to 8%, 12 down to 4, and someone was even able to bring it down to nearly 0. Wow, that’s some powerful stuff.
- Don’t close your credit accounts – Keeping your credit cards with $0 balance is great, but you don’t have to close them out once you’ve done so. Opening and keeping those accounts open actually helps your credit score as the credit bureaus can “see” that you are able to pay off your balances and not have late payments while you have the ability to borrow X amount of money (X = sum of credit limits on all your accounts). And if you can increase some or all of those limits by spending a few minutes on the phone, it makes for cheaper money in the future with a better credit score.
- Dispute any blemishes – There’s no harm, no foul. It’s best to file a dispute using certified mail instead of online, and they have 30 days to resolve your dispute. It doesn’t hurt your credit score if you dispute an error, it only helps it if successful. Dispute away!
- Check your credit report annually – You have probably heard this already, but there is only one truly free way to do this: AnnualCreditReport.com. Sites like CreditKarma may allow you to check your report there, but they also sell your information to third parties. I’d rather not. (Terms: License to Credit Karma and its Service Providers for User Content. You grant to Credit Karma the unrestricted, unconditional, non-exclusive, unlimited, worldwide, irrevocable, perpetual and royalty-free right and license to host, use, copy, distribute, reproduce, disclose, sell, re-sell, sub-license, display, perform, transmit, publish, broadcast, modify, reformat, translate, archive, store, cache or otherwise exploit in any manner whatsoever, all or any portion of your User Content for any purpose whatsoever in all formats… and each such third party will be entitled to benefit from the rights and licenses granted to Credit Karma under this Agreement. You further authorize Credit Karma to publish your User Content in a searchable format that may be accessed by users of Services, the Internet and mobile devices – via https://www.creditkarma.com/about/terms) Ouch!
- Build your business credit lines – If you’re a business owner, you should know to incorporate into an LLC. Even better is to also build your business line of credit. It will allow you to utilize cash to build your business while you still pay for necessary expenses; all while protecting your personal assets. Start by finding vendors and suppliers who will allow you to purchase their products on credit like business supplies, gas, then move up from there.
Once you increase your credit score, the cost of borrowing is much cheaper. So knowing that banks are making a killing off of us as our savings account sits idle, got us thinking. We can become a sort of ‘bank’ ourselves, borrowing money with a given return (Good Debt) as long as we make more money with an even higher return. Leverage – that’s where each of your investor hats must be implemented. Whether it’s real estate, starting a business or other investment, it’s using someone else’s money as a vehicle to make more money. Fortunately this weekend, we were able to learn some creative financing techniques to make investments without even utilizing a bank. It’s easier said than done, but it’s a faster start to where we all want to go.
Do you have any other bank-related recommendations to not be suckered?