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Put your money in the bank? As of early 2018, Value Penguin says, “the most common interest rate on savings accounts is 0.01%.”
At that rate, if you have $10,000 saved up and you wait a year, you’ll have earned enough interest to take a big shopping trip… to the dollar store… to buy one thing.
There has to be a better way to profit from banks, right? After all, as the robber said when asked why he chose to rob a bank, “That’s where the money is.”
Fortunately there are many ways to get some of that money. The list below includes ten ways to make money with banks, without putting your hard-earned money in 0.01% savings accounts or resorting to robbery.
1. Work for a Bank
According to the latest from the Bureau of Labor Statistics, the median wage for bank tellers is just $27,260.
On the other hand, you don’t need a degree to get these jobs, and if you stick around long enough to get a few raises, you might make it to the top 10% in terms of wages, where you’ll be making at least $37,760.
You also might get promoted to head teller. Or, you might work your way into a position as a loan officer.
The median wage for that position is a respectable $63,650. Be aware, though, that some banks do require their loan officers to have a bachelor’s degree.
2. Own a Bank
How much does it cost to be a partial owner of a bank? As little as $30 if you buy just one share of a low-priced bank stock.
You could buy through a normal brokerage account, but the commissions will eat up a large percentage of your money on small purchases.
So if you are starting small, consider investing directly with companies that offer DRIPs, or dividend reinvestment plans.
Many banks offer DRIPs at very low cost. For example, Bank of America has just a $50 minimum investment for their plan, and no fees.
How do you make money with bank stocks? There are two basic ways, and often you can benefit from both.
First there is price appreciation. For example, if you invested in 100 shares of one of Warren Buffet’s favorites, Wells Fargo (WFC), when it dropped to $12 per share in 2008, your $1,200 would be $6,400 at today’s price of $64 per share.
The second way you make money is collecting dividends. Wells Fargo is paying a dividend of $1.56 per share currently, or 2.38% based on today’s price.
Some of the best bank stocks for dividends pay closer to 4%, which is a lot better than any bank savings accounts.
Of course, you can lose money if the bank does poorly, but a healthy dividend does make it easier to hold onto the stock during downswings.
3. Collect Account Opening Bonuses
I love getting big bonuses for opening bank accounts. I open one, meet the requirements (which can include leaving some money there for six months), collect my bonus, and close the account. My best bonus so far has been $500, and my worst was $100.
Last year was an off-year for my bank bonus efforts, but I still managed to round up a profit of over $1,000 from various bonuses, after deducting a few expenses.
As I’ve explained in a previous post, in prior years I made thousands of dollars annually from bank bonuses.
Some banks offer bonuses nationally, while others are only for residents of certain states. Check out a list of the best bank bonuses to find out what’s being offered right now.
4. Buy a Bank Foreclosure Property
Banks not only have a lot of money, but they also own a lot of homes that they’ve foreclosed on. And they typically need to sell them quickly so they can put their money back to work.
Of course, the purchase price isn’t all that matters. You have to have a definite plan for fixing up the home and selling it at a significantly higher price.You can also buy foreclosed homes to rent out for income.
5. Start Penny Hoarding
Pre-1982 pennies are made of 95% copper (they are mostly zinc after that). The price of copper is over $3 per pound as I write this, which makes those pennies worth around two cents each.
While it’s illegal to melt them down, people are hoarding them, waiting for the day when the penny is no longer used as currency, and they can cash in.
Penny hoarders buy their coins from the bank by the roll or by the bag (5,000 pennies or $50), and then sort through them to remove the valuable ones.
When I did two test runs of 1,000 pennies each, I got 16% and 20% pre-82 pennies, as well as a few old “wheat pennies,” and four dimes mixed in.
My experiment was fun, like a treasure hunt, but too tedious and slow to be profitable. However, serious hoarders don’t sort by hand.
They buy a good copper penny sorting machine, which can automatically separate by weight the copper and zinc pennies (pre-82 and post-83 pennies; those minted in 1982 can be either).
And they don’t necessarily wait to cash in. You can sell copper pennies on eBay right now, and let someone else wait to melt them down when it becomes legal. At the moment, a bag of pennies worth $100 face value (10,000) sells for around $145.
6. Go Coin Roll Hunting
Beside hoarding copper pennies, there is another reason to buy rolls of coins from local banks; to go “coin roll hunting.” That involves searching through coin rolls for dimes, quarters, and half-dollars minted before 1965.
Up until 1964 these coins were made of 90% silver, so they’re worth many times their face value; about 12 times face value at the moment. You can sell them for their silver value at any coin shop.
As you search your rolls, watch also for old coins that might have numismatic value. For example, if you find Franklin half dollars (1948 to 1963), they may have value beyond the silver melt-value. Look up the value of potentially rare coins using a price guide.
Why are any valuable coins left in circulation with coin roll hunters constantly on the lookout? One simple (and sad) explanation is that kids commonly raid a parent’s or grandparent’s coin collection and spend the coins.
But you’ll still need to look through a lot of coins; one coin roll hunter says he finds only one silver dime for every 80 rolls he checks (that’s 4,000 dimes!).
7. Take Advantage of Teaser Interest Rates
If you check a list of the best savings accounts, you’ll see interest rates for some of them are above 1.5% at the moment. That’s 150 times better than Bank of America’s 0.01%, but it’s also commonly a “teaser rate.”
The banks at the top of these “best account” lists tend to drop the rates from time to time, perhaps as they meet some new-account goal.
The solution to this problem, if you want to make a decent rate in an FDIC-insured account, is simple: Keep moving your money. Typically you’ll have to move your savings a couple times per year to keep it in accounts with the best interest rates.
8. Borrow for a Business
Perhaps one of the most profitable ways to make money with a bank is to borrow money to start or expand a business. Of course, the business has to be successful, and the bank has to be willing to lend to you.
To solve the latter problem, consider getting an SBA loan. These are loans you get through a local bank, but they are partially guaranteed by the Small Business Administration.
That guarantee (and the process you go through to get it) makes banks much more willing to take the risk and loan you the money.
9. Borrow to Flip a House
Borrowing money makes sense anytime you can make more with the borrowed funds than they cost. Borrowing to flip a house is a great example.
You might spend as little as $5,000 in fees and interest for a mortgage loan that lets you make a $25,000 profit on a home.
The FHA now allows house flipping with their foreclosed properties, so that’s one place to look for opportunities. Otherwise, hone your negotiating skills and start talking to owners of ugly homes who want to sell.
If you can’t get a loan from the bank on the property, consider borrowing against your own home (assuming you have enough equity).
10. Get a Bank Credit Card
In a previous post I detailed many ways to make or save money with credit cards. And sometimes local banks offer the best deals.
For example,a few years ago I got a credit card from my local SunTrust Bank. It offered a signup bonus, but also 5% cashback on groceries and gasoline purchases ($6,000 limit the first year).
I bought $500 visa gift cards at grocery stores, earning $25 on each, or $19.34 profit after the $4.95 purchase fee and the $0.70 money order fee (which is how I converted them back to cash in my bank account).
11. Flip a Bank Repo-Car
I’ve flipped a few cars for a profit over the years, and I know nothing about cars. I usually just put up the money and let a partner do the work.
One of the best places to find cars you can clean up and sell for a profit is at local banks and credit unions. They regularly repossess cars when borrowers stop making their auto loan payments.
Some banks sell the cars at auctions, while others sell them directly to the public.
On RepoFinder.com you can click on your state and look for for banks near you that have repossessed autos to sell.
Tell us how many ways you’ve made money from banks … and keep on frugaling!