Breaking the Bank, winning so much that the table, or even the casino itself, runs out of money, is a favorite daydream of those who head for the big casinos.

10 Menacing Ways Casinos Keep You Gambling

In reality, of course, the house almost always wins, but just occasionally, either by cheating, by skill, or sometimes just by dumb luck, a player comes along who wins really really big.

Far from trying to deter these big winners, many casinos encourage them, because they know that the publicity of a big win, can bring in 10 times more than they have to pay out (and, in any case, some of the big winners don’t know when to stop, and keep on playing till they are right back to being broke).

However, here are 10 gamblers who, even if it was just for a little while, managed to break the bank.

10 Joseph Jagger

Joseph Jagger was a mill worker in Yorkshire, England in 1880. Up to the moment he decided to travel to Monte Carlo he had never traveled more than a few miles from his hometown. He had just been made bankrupt and, fearing that he and his family were destined for the debtors prison, he decided that if he was in for a penny, he might as well be in for a pound.

He borrowed money from members of his family, then took a steam ship to France, and caught a train to Monte Carlo, and its famed casinos. Jagger was not a gambler, but he was something of an engineer, and he observed a very slight tilt in the roulette wheel, which meant that numbers on one side of the wheel were a little more likely to come up than those on the other side.

Although Casino managers watched Jagger carefully during his winning streak, they were unable to detect his ‘system’ because he really didn’t have one. He won £80,000, an incredible amount for his day, and returned to his Yorkshire town where he bought 30 terraced houses and gave them to his family and friends. It is believed that he never gambled again.

Joseph Jagger’s win prompted a complete change in the design of roulette tables throughout the world.

So you may as well put that spirit-level down.^[1]

9 Don Johnson

Don Johnson was well known in gambling circles as a ‘whale’. He had already won a fortune playing at Atlantic City’s casinos. He took $5 million from Borgata, and another $4 million at Caesar’s, so, when he walked into the Tropicana, the casino management were certain to have been nervous.

Sitting at the high-roller table, Johnson started playing his favorite game – blackjack. He continued playing for the next 12 hours, averaging a hand a minute. At $100,000 a hand.

On one turn of the cards alone, Don Johnson won $800,000, after splitting his hand twice.

At the end of his shift at the table, Johnson had taken almost $6 million from the casino.

Casino staff watched Johnson’s game closely to see if he was counting cards, something which, while though not illegal, will get you banned from most casinos (assuming you do it well). They could find no evidence that he was counting cards, and were forced to honor his win.

Johnson’s advantage came from knowing the gaming industry. He understood how the odds were calculated and knew when to bet high. In 2011 the casinos were struggling financially and competed aggressively to entice the big players through their doors. Which is perhaps why the manager of the Tropicana authorised a $100,000 dollar a hand limit. (He was later fired). Not only did they let him play, but they invited him in, negotiating discounts against any losses.

And because they were desperate to attract his business, they made other concessions too, for example about how many times he could split his hands, and how many decks were in the shoe. Each time, Johnson made his own calculations, and the odds shifted a little more in his favor.

And Johnson kept on playing until each Casino pulled out of the deal. At which point, he cashed in his chips and left. Whereupon, the casinos were forced to issue a profits warning.^[2]

8 The MIT students and Las Vegas

If you are a student, you are likely to be on the look out for a job that will work around your studies. For many students, this might be something menial and low-paying. If you are a math genius, at MIT, however, your options are better.

During the 1990s a team of students earned extra money by playing blackjack in Las Vegas.

Led by Bill Kaplan, a professional gambler, the team learned to count card. Kaplan had, in fact, already been banned for this, which prompted him to form a team of the brightest students, who he trained in the art of card-counting.

Membership of the group changed as students graduated, which, no doubt, helped them to go undetected for so long. At their peak, teams were flying into Vegas every weekend, and flying home again with their bags stuffed with cash. In one weekend alone, they won over $400,000.

Despite their elaborate use of disguises, and the strict rotation of the casinos they played at, the team was eventually spotted and, like their mentor before them, they were banned from the casinos.

The film 21 (trailer above) is loosely based on their story.^[3]

7 Charles Schwab

Charles Schwab was a noted industrialist of flamboyant habits. The American steel magnate made a significant contribution of the allied success in World War I, and his reputation should have been assured, but he was often impulsive, and not always scrupulous in his business dealings.

In 1902, this impulsive and flamboyant Schwab went to Monte Carlo, and played roulette. The roulette wheel no longer listed to one side, and Schwab had nothing on his side, except luck. He played for several days, always the same game, and despite some runs of bad luck, he kept on playing. Eventually, his wins began to overtake his losses, and often won the table maximum, winning up to 75,000 francs a hand.

After playing at the tables for several days, Schwab was declared to have broken the bank, although no one would say exactly how much he had won. His win didn’t do him much good, however. By the time of his death, his fortune, once estimated at $40 million dollars, was gone. He died insolvent, even owing $25,000 to a Catholic college, having borrowed the money on the promise of leaving them $2 million in his will.

They never got a cent.^[4]

6 Paul Newey

Paul Newey is a businessman, and high stakes gambler. In 2005, he was responsible for a casino in Birmingham, England, having to issue a profits warning, after he won £3 million pounds in a single night.

Newey, who made his money from offering high-interest loans to poor people, is happy to win, or lose, big. In January 2005, his preferred game was roulette, where he bet as much as £300,000 on a single spin of the roulette wheel.

His strategy, known as ‘Full and Complete’, covered all possible permutations of a single number, which gave him odds of around 3-1, turning his £300,000 bet into nearly a million pounds.

However, it was not all bad news for the casinos. Newey was said to have lost the whole of his £3 million win over the course of the following month, although Newey himself was unperturbed. In 2012, he changed his game from roulette to poker, and was eliminated from the world series on the 2nd day.^[5]

10 Tricks Casinos Use On You

5 Archie Karas

Anargyros Karabourniotis, better known as Archie Karas, is a legend in casino history. Having grown up poor, Karas knew the value of money. And of luck. For a while, Karas had both, being credited with the longest winning streak in casino history.

In 2 years, Karas managed to turn his initial $50-dollar stake, into an incredible $40 million.

He began to make money as a pool-hall hustler, and then moved on to poker. At one point, he is said to have sat at a poker table with $7 million in chips in front of him, waiting for people to come and play him. He played, and beat, a 3-time World Series poker champion, taking $1.2 million from him.

The top players in the world began to refuse to play, because the stakes were too high, and so, Karas switched games again, and began to throw dice, a pure game of chance. On one evening at Binion’s Horseshoe, he held every single $5,000 chip in the place (their highest denomination), with a value of around $18,000,000. The chips were stacked in racks of $500,000. The casino was forced to ask Karas to sell back some of the chips in order that other players had something to gamble with.

After 2 years of winning, however, Karas’ winning streak came to an abrupt end. Karas lost $20 million playing dice. Then he switched games to baccarat, and lost another $17 million, before going back to the dice. Within 3 weeks, Karas lost $39 of his entire $40 million fortune.

Down to his last million, he made a brief comeback at poker, doubled his money, then blew every last dollar when he returned to shooting dice.

The Run was over.^[6]

4 Charles De Ville Wells

In 1891, Charles De Ville Wells arrived at Monte Carlo with $4000, a not inconsiderable sum, (which would now be worth 10 times that). He sat at a roulette table, and stayed there all evening, only leaving when the casino closed. He did not even stop to eat or drink. The following day, he returned, and for 3 days after that. Each time he sat in the same spot, at the same table, and played.

His winning streak was so marked that onlookers stood 8-deep around the table watching him, and those who were lucky enough to get a spot at the table, tried to copy his bets. By the end of his weeks’ vacation, Charles De Ville Wells had won $4 million, and had broken the bank.

All the casino’s reserves of money were spent, and play had to be suspended 10 times at his table while more money was brought up from the casino vaults (the poker chip had not yet been invented).

It is believed that Wells is the inspiration for the music hall song, ‘The Man Who Broke the Bank at Monte Carlo’. Wells claimed to have developed a system to beat the roulette wheel, but it is thought that he was probably cheating, given his previous history as a con man. No one is quite sure how he did it, but it has been suggested that it may have been a set up by the casino owner to generate publicity.

However, the win did not bring him much luck, and when he died in 1922, he was buried in a pauper’s grave, still owing 2 weeks rent.^[7]

3 Ed Thorp

Professor Ed Thorp took a trip to Las Vegas with his wife in the 1950s, and had a game of blackjack. Being a professor, of probability and statistical analysis, he began to wonder about the game, and realized that it could be beaten. In 1962, he published his findings in a now famous book, Beat the Dealer, which demonstrated, with mathematical certainty, just how players could win.

Which was very sporting of Thorp. The casinos, however, were not quite so sporting. They changed the rules of the game overnight, so that his system would no longer work. This backfired, however, when occupancy rates at the blackjack tables fell almost to zero, and the casinos were forced to return to the original rules.

Thorp’s system was back on.

This was, ultimately, good for the casinos since everyone who walked in fancied their chances at the tables, and were usually found wanting. Visitor numbers to the casinos soared. In practice, very few players are skilled, or smart enough to Beat the Dealer.

Not surprisingly, Thorp, himself, was a very successful blackjack player, and also developed a system for beating the stock market which saw his returns far outstrip expected revenues.

He published a book about that, too.^[8]

2 Akio Kashiwagi

In 1990, Akio Kashiwagi was a billionaire and 1 of the 5 biggest gamblers in the world, regularly betting $10 million in a single night’s play. It was then that he crossed paths with Donald Trump.

Trump had recently purchased three casinos in Atlantic City and was anxious to attract some high-rollers in order to generate publicity. Kashiwagi seemed the ideal person. He played baccarat, and often bet $250,000 per hand. Although he was advised against it, Trump insisted on inviting Kashiwagi to play at his casino.

Donald Trump was initially thrilled as Kashiwagi sat at a specially roped off table, and hundreds of people poured into the casino to watch him play. Within 30 minutes, however, Trump began to worry, as Kashiwagi won $500,000. By the end of the first night, he was up $4 million.

When he was $6 million up, Kashiwagi decided that he had had enough of the onlookers, cashed in his chips, and went home to Japan. Donald Trump was furious.

So he invited him back.

This time he secured an agreement that Kashiwagi would bring $2 million and would not leave until he had either doubled his money, or lost the lot.
Kashiwagi played, and after 5 days was $10 million down. At which point, Trump stopped the game. Kashiwagi claimed that this was bad faith, and was furious at the insult. However, Kashiwagi left a cheque for $6 million, to cover his losses.

It bounced.

So, bad faith on both sides.

The episode ended unhappily for both parties.

All three of Trump’s casinos went bankrupt, while Kashiwagi was found brutally murdered at his home soon after, having been stabbed 150 times with a Samurai sword.

And Trump never got his money.^[9]

1 Nick Leeson

The world’s biggest gambler didn’t need to set foot in a casino, in order to break the bank. Nick Leeson was a fund manager for Baring’s Bank, the second oldest bank in the world, and one of the most exclusive.

At just 27 years old, Leeson was one of the bank’s star traders in derivatives, initially making huge profits for the bank. However, the bank’s systems were rather, shall we say, lax, meaning that Leeson was given the responsibility of checking his own trades. Which, in effect, meant that no one was checking at all.

When his trades were unsuccessful, instead of reporting the losses, he created a secret account to hide his losses, and tried to make up the difference with riskier trades.

And no one checked.

In 1995, he made a short-term gamble on the Nikkei index, in effect, gambling that its value would remain stable overnight. Unfortunately for Leeson, an earthquake hit Japan that night, and the Nikkei dropped significantly.

Leeson made a few more desperate trades, and then, realising that the game was up, he fled, leaving a note which simply said, ‘I’m sorry.’

By the time he was arrested in Germany, his losses had been calculated at over $1 billion, and the second oldest bank in the world was bankrupt.

Leeson was sentenced to 4 years in prison, and now makes a living as an after-dinner speaker, advising people on how not to break the bank. The trailer for the excellent film Rogue Trader based on the story of Leeson is above.^[10]

10 People Who Successfully Gamed The Lottery

For roughly a century, bank robberies have been glorified in the media and on the silver screen. (Think Bonnie and Clyde, Public Enemies, and Butch Cassidy and the Sundance Kid, to name a few.) The extent to which they have been romanticized in movies, however, can dull one’s sense of the sheer terror of such events.

All the same, bank robberies are very real events in which people can (and do) lose their lives, not to mention the aftereffects on those who survive. The following list takes a historical look at both the early days of bank robbery in the United States as well as inexplicably bizarre and shocking heists that have been largely forgotten.

10 Reconstruction Era

During the Civil War, bank heists were not considered to be robberies but acts of war. Case in point: the St. Albans Raid, which was carried out in Vermont by Confederate soldiers in 1864. Such acts were viewed not only as revenge on the North but as strategic war tactics that pulled Union soldiers from the front lines while simultaneously lining the pockets of an impecunious Confederacy. That all changed on February 13, 1866, when a group of horsemen rode into Liberty, Missouri. On that snowy afternoon, ten to 13 “bushwhacking desperados” raided the Clay County Savings Association, leaving one college student dead.^[2]

In time, the James-Younger Gang would be implicated for the deadly heist, along with an innumerable amount of other fatal robberies. The heist has been noted as the first successful daylight bank robbery during peacetime in American history. As we will see, it most certainly wasn’t the first bank robbery, period.

While Jesse James set his sights on anything and everything—banks, trains, stagecoaches, etc—former Confederate soldiers still held a passionate and unremitting disdain toward the North. This resulted in a series of robberies aimed at banks that held the funds of former Union soldiers. The Northfield Bank in Minnesota, for example, was specifically targeted due to their client Adelbert Ames, a despised former Union general.

9 Age Is Just A Number

In 2018, the Pyramid Federal Credit Union in Tucson was robbed at gunpoint by a career criminal the state of Arizona would not soon forget. The suspect, Robert Francis Krebs, is undoubtedly a rarity in his line of work, given his ripe old age of 80.^[2] After serving more than 30 years in prison for a 1981 bank robbery in which two employees were left handcuffed in a vault, the geriatric bandit was destined to return to his favorite pastime. Surprisingly, the title for “America’s oldest bank robber” actually goes to J.L. Hunter “Red” Rountree, who committed his last heist in 2003 at the age of 91. He died in prison the following year.

Though it’s safe to assume there is a scarcity of gun-wielding great-grandpas, there has been an increase in the United States of robberies conducted by minors. According to FBI statistics, nearly 18,000 boys and about 1,900 girls younger than 18 were arrested for robbery in 2008, amounting to a 38-percent increase in less than a decade.

In 1981, a midtown Manhattan bank was robbed at the hands of a nine-year-old boy. In a risibly creative defense, the child’s attorney argued that he was influenced by television and that he was “only playing” when he aimed the toy gun at the bank teller: “Robert is a victim of shows that are on television, depicting violence and breaking the law.”

8 The Monk

The journey of one of Ireland’s most infamous criminals began at an early age. From jumping over counters in banks to racking up more than 30 convictions before his 18th birthday, Gerry “The Monk” Hutch is credited—albeit disputably—with pulling off two of the biggest heists Ireland has ever seen. In 1987, at the age of 24, Hutch and his crew robbed a Securicor van for £1.7 million, making him enemy number one for the Gardai (the state police force of the Irish Republic).

Such a flattering title, however, did little to deter Hutch, despite the fact that the Gardai preferred shooting armed robbers as opposed to apprehending them. The Monk’s biggest score would come in 1995, when he made off with IR£3 million from Brinks Allied in Dublin. Throughout the years, the Gardai did everything in their power to capture Hutch, and even then, prosecuting the criminal mastermind seemed fruitless given the lack of evidence.^[3]

Eager for a conviction and with little to go on, the Criminal Assets Bureau (CAB) targeted Hutch for money laundering in 1999. Hutch eventually reached a settlement with the CAB. These days, he lives a more quiet life as a businessman with a taxi fleet and property interests.

7 Gladbeck

The Deutsche Bank robbery in Gladbeck will forever be the epitome of abysmal failure pertaining to the handling of a hostage crisis. It all began in West Germany on August 16, 1988, when Dieter Degowski and Hans-Jurgen Rosner held the bank’s employees captive in what has now become known as “The Gladbeck Hostage Drama.” Over the next three days, the antics of the murderous duo became a public spectacle with the help of eager reporters determined to make a name for themselves.

The media’s extraordinary access to the crime in progress not only hindered police involvement but indisputably allowed the incident to escalate. While millions watched on television, the two men gave impromptu interviews as if they were movie stars, all while holding guns to the heads of their quivering hostages. Fifty-four hours after the start of the madness, Degowski and Rosner were in custody, while victims Emanuele di Giorgi, 15, and Silke Bischoff, 18, lay dead in the street.^[4] One police officer had also been killed.

It became evident, only after the horrifying end result, that the journalists clearly overstepped their boundaries. Their involvement and behavior were deemed “unethical,” spurring the German Press Council to rewrite their own guidelines. Due to this, reporters in Germany are no longer allowed to interview hostage takers, negotiate on their behalf, or intervene in any crime in progress—guidelines that were too little, too late for three people.

6 Hasty Getaway

At 10:30 AM on August 13, 1909, two men entered the Santa Clara Valley Bank armed with revolvers. Staring down the barrels of their guns, the cashier had no choice but to hand over $7,000 in gold to the unmasked bandits. Just as swiftly as they arrived, they were gone, out the front door and into an awaiting car. Nevertheless, the feeling of jubilation was fleeting, given that the automobile broke down 1.6 kilometers (1 mi) out of town. Taking off on foot, the two men and their getaway driver were soon overtaken by a posse led by the sheriff, chief of police, and a pissed off mob of citizens. That hot August morning in 1909 became the first bank robbery in which the culprits used an automobile as a means of escape.^[5]

Two years later on December 21, 1911, the Bonnot Gang would employ the automobile for their expedited route to freedom. The notorious band of anarchist murderers and thieves struck terror into the hearts of Parisians, killing anyone who stood in their way. Seeing as the automobile was a guaranteed method to elude authorities, who relied on horses, the men were determined to get their hands on a vehicle. Their opportunity arrived on a desolate open road far from society when a De Dion-Bouton limousine crossed their path.

As mercilessly as was to be expected, the men executed both the driver and the passenger before heading into town to pull off the perfect heist. In spite of being pursued by authorities and locals much like in Santa Clara, the revving engine of the limousine, along with the Bonnot Gang’s firepower, allowed them their lives and freedom, both of which would be short-lived. This incident is considered the first successful use of a getaway car in a bank robbery.

5 16-Millimeter

With fantasies of getting rich, Steven Ray Thomas and Wanda DiCenzi calmly walked into the St. Clair Savings & Loan Co. with nothing but a measly, yet convincing, starter pistol. It was April 12, 1957, when Thomas, 24, and DiCenzi, 18, made off with $2,376 to an awaiting getaway car driven by 18-year-old Rose O’Donnell. The brazen holdup would have been nearly flawless, had it not been for the hidden 16-millimeter camera capturing the culprits on film for the world to see. Before then, surveillance technology was primarily for military use and unheard-of in public settings, thus making the crime the first bank robbery ever captured on film.

Less than 24 hours later, the Cleveland bank heist became international news, with still shots of Thomas and DiCenzi plastered on the front pages of newspapers throughout the United States. In a panic, Thomas fled town, making it to Indianapolis before coming to the realization that his hopes of a successful escape were futile. Collapsing to the pressure of their inevitable capture, all three voluntarily surrendered to authorities within days of the robbery. Following Thomas’s sentencing in October 1957, headlines read “Star Gets 10-to-25.” Meanwhile, both women were given probation. Ironically, the camera that opened the door for a new kind of law enforcement had been installed the day before the robbery.^[6]

4 Edward Green

On December 15, 1863, in Malden, Massachusetts, a bitter drunkard with heavy debts walked into the Malden Bank to exchange a torn dollar bill for a new one. Noticing that he and the bank teller, 17-year-old Frank E. Converse, were the only ones present, Edward Green formulated a plan to end his financial troubles.

Green returned home, retrieved his pistol, and immediately headed back to the bank. Without a moment’s notice, he raised his gun and shot the young man in the center of his head at point-blank range. Following the ruthless murder, Green made off with $5,000, spurring a nationwide manhunt. The crime would go unsolved for some time.

By early winter the following year, locals took notice that Green had begun to pay off his debts. Chatter throughout the community ultimately led to an investigation. Authorities ascertained that he had paid off a two-year debt of $700. An examination of the bills Green used later revealed that they were from the Malden Bank, sealing his fate.

Upon his arrest, Edward Green confessed to murdering the teenager and robbing the bank. Two years later, on April 13, 1866, the murderous drunk met his fate at the gallows, becoming the first armed bank robber to be hanged in the United States.^[7]

3 False Imprisonment

On the night of August 31, 1798, an unbelievable sum of $162,821 was stolen from the Bank of Pennsylvania at Carpenters’ Hall in Philadelphia. Police immediately suspected blacksmith Pat Lyon as the culprit, given that he had changed the locks to the iron vault the day prior. When word reached Lyon that he was the prime suspect, he immediately turned himself in to authorities in order to clear his name. During a lengthy interrogation, the blacksmith spoke about his own suspicions concerning a “stranger” loitering around the bank the day before the heist. With the police certain that it was an inside job, Lyon was arrested and sent to the Walnut Street Prison.

Interestingly enough, the stranger Lyon spoke about was arrested soon after. The conspirator, Isaac Davis, was able to gain access to the inside of the bank with the help of his accomplice, Thomas Cunningham, who slept in Carpenter’s Hall the night of the robbery. Within days of their thievery, Cunningham succumbed to yellow fever, leaving all the loot in Davis’s possession. What would have been the perfect heist—a deceased accomplice and another man taking the fall—ended in a comically pea-brained fashion; Davis had the bright idea to deposit the stolen money into the very bank he’d robbed it from.

Upon his foreseeable arrest, the harebrained burglar gave a full confession and made a deal to return all the money with the promise of a pardon. Soon after, Davis was once again a free man. Meanwhile, Pat Lyon remained in prison. After he’d spent nearly three months imprisoned in harsh conditions, law officers grudgingly agreed to release him. A grand jury officially cleared Lyon the following year, and in 1805, he won a civil case for false imprisonment and was awarded $12,000. In the end, the Bank of Pennsylvania at Carpenters’ Hall will be remembered as being the first bank robbery in the United States of America.^[8]

2 Postwar Japan

On January 26, 1948, a man identifying himself as a health inspector entered the Imperial Bank in Tokyo and deceived 16 people into drinking poison. Within minutes, the unsuspecting victims were writhing on the floor as the callous killer raided the bank, stealing cash and checks. By the end of the heist, 12 had succumbed to the toxic effects.^[9] It took six grueling months for police to make an arrest. Their suspect, Sadamichi Hirasawa, matched the description of the murderer, his handwriting was similar to an endorsement on a stolen check, he had a record of unexplained bank deposits, and, ultimately, he confessed.

Over the years, however, Hirasawa gained a growing number of supporters who maintained that the United States was behind the brutal plot. Many believed that the culprit was a member of the Japanese army—which was protected by US military authorities. Theories circulated that the robbery was a ploy in order to conduct experiments for the military’s germ warfare unit. The unfounded notion only strengthened following Hirasawa’s recanting of his confession. Despite incessant legal battles for his release, 18 petitions for a new trial were rejected, along with five for a pardon. After 32 years on death row, Hirasawa died of pneumonia in 1987 at the age of 95.

1 Bizarre Phenomenon

“The party has just begun!” exclaimed Jan-Erik Olsson after discharging a submachine gun into the ceiling at Sveriges Kreditbanken in Stockholm, Sweden. It was August 23, 1973, when the brazen robber took four bank employees hostage. The incident would ultimately bring to light a condition that would baffle psychiatric experts for years to come.

The demands were straightforward: more than $700,000 in Swedish and foreign currency, a getaway car, and the release of a fellow bank robber and cop killer, Clark Olofsson. Within hours, the demands were met. In the meanttime, the hostages, cramped up in a vault, began forging a bond with Olsson as well as Olofsson, who was permitted inside the bank. By the following day, everyone was on a first-name basis. Perhaps it was the compassion the men showed toward their captives, such as draping a wool coat over a shivering Kristin Enmark, consoling a petrified Birgitta Lundblad, and allowing Elisabeth Oldren to leave the vault when claustrophobia set in. In time, the hostages began fearing the police more than their captors.

Five days after the ordeal began, tear gas was pumped into the vault, prompting the surrender of the two perpetrators. Standing in the vault’s doorway prior to the men’s arrest, the four hostages embraced, kissed, and shook hands with Olsson and Olofsson as tears streamed down their faces. Even after the two were imprisoned, their former hostages made jailhouse visits. According to psychiatrists, the four became emotionally indebted to their captors for being spared death. Months later, psychiatrists officially dubbed the bizarre phenomenon Stockholm Syndrome.^[10]

Adam is just a hubcap trying to hold on in the fast lane.

People are getting smarter these days. At a time of increased financial concern the world over, it’s no wonder we are always looking for ways to save a buck. But are we really cognizant of the trickling tap effect? Can we afford to be shortsighted when it comes to disappearing money?

The following list will dive into brief synopses of the little secrets of financial institutions. Keep in mind that I am not receiving compensation from any financial institution or brokerage. This is a product of my experience and research. These points express my personal observations and are intended to be used for educational purposes.

We may not think of the bank as a place to spend money, but tellers are actually trained to make sales. Profitability, as with any successful venture, is the intrinsic dialect of the system. In this current low-rate ecosystem, profit by interest alone is not enough. Special and limited time offers are marketing tools used to get you inside. The immediate problem here is they “forget” to tell you how promotional rates will eventually change. On a trip to the bank you won’t have trouble finding motivated salespeople. Low opening rates, reward point systems and extended payment periods are just a few of the incentives they use. But unless you are an astute money manager, keeping track of interest and fees is probably not part of your day planner. Everything a bank offers you needs to be looked at more closely to determine whether or not you are getting ahead. All too often, incentives are well-planned gimmicks.

You probably recall the original Willy Wonka & the Chocolate Factory (1971) film scene where a stranger in the street appears at the factory gate as Charlie stands wistfully looking in. “Nobody ever goes in…and nobody ever comes out”, he solemnly warns.

While it may be quite feasible to change banking institutions, I can’t help using this closed environment illustration. Since bankers and tellers have to make certain numbers to keep their jobs, losing clients and business is out of the question. To meet quotas, they are pressured to be aggressive in selling loans and investment vehicles. No disrespect to these licensed bankers and tellers however, as the services they sell can be helpful to individuals as well as businesses. But credit cards are too accessible these days. For young people and those in low income brackets, credit and loans are an easy out. They fail to realize how expensive this is though, and inability to keep up results in poor credit down the line. And it doesn’t just disappear by tapping the Staples “easy” button.

You may not be paying off debt as fast as you think. This is usually where people begin to really listen up. On credit cards, you pay high rates of interest on large purchases, and when it comes to paying that debt off, you start from the bottom up. The smallest debts carrying the lowest rates will be erased first. This principle is called negative order of payment. Furthermore, the bank will issue you credit cards no matter if you have $100 or $10,000 in your checking account. These values represent a liquid asset that could be there today and gone tomorrow. Providers know if there’s a card in your pocket you will use it, and they will take their liberties in optimizing the interest you pay. Some bankers have even admitted their interest rates frequently fluctuate, despite what a card agreement may state.

Not all banks charge for the service of online bill paying and/or money transfers. However, it is advisable to ask your bank about this. It could be another contributor to the cannibalization of your checking account. Convenient online bill payment is one of the many great features provided by banks. If you’ve been paying bills online, be sure to check your transaction history or call your bank. Payments can lead to a significant commission downside. Typical bill payments include phone, internet, cable, hydro, heating and charitable donations. If you are being charged for this, try negotiating it or ask if there is a limit issue. Keep in mind you will be charged for wire transfers to different accounts as well.

If your bank ever informs you of an account upgrade, promotion or offering, always read to the end of the paperwork. For example, if offered a “free” overdraft protection limit, make sure there is no initial fee. As well, every time you close an account there will be a charge. If you use debit cards a lot, but neglect paying attention to your statements, you might be in for some service charge surprises. Some banks are good about this and will promote you to a higher transaction limit. For this there will be a nominal fee, but you will no longer pay for each additional card use. Of course, the best solution of all is to carry cash and only use debit or credit in a pinch.

This is why you should always shop around and ask the right questions before selecting a new deposit account, credit card, line of credit, mortgage, loan, etc. For basic accounts, you could be looking at charges for general maintenance, minimum account balance, online banking, large cash deposits, and teller fees. Not to mention everything else we’ve already come across. With recent new regulations on banks and lenders, some charges are now illegal. This forces banks to stretch their imagination a little, raising other fees or implementing new ones. All good companies innovate, as you will often hear in the news surrounding markets leaders. Why would your bank be any different?

Most traditional bank accounts offer extremely low interest rates. Commonly people leave varying sums of money in checking and savings accounts for years. These funds may in fact depreciate with time as a result of inflation. In this we learn a valuable concept which I like to refer to as stagnation. The interesting thing here is that that inflation is virtually unperceived and yet it impacts everyone year after year. This is a classic example of capital decay, an intrinsic downfall of stagnant cash. Letting your money sit in a bank account is like driving your first car 10 years later. At first it seemed cool, but now it’s begun to lose its appeal and value. One of the things banks probably won’t tell you is that the decent promotional rate on your savings account will be lowered after a certain time.

As I’ve previously alluded to, banks act like any traditional business in the sense of profitability, sales and client base. These considerations are put far before your best interests as a customer. Secret fees, unannounced interest hikes and manipulated credit rates should make you suspicious enough to do your due diligence. Good news is that online banking has made keeping an eye on account activity a lot easier. If you ever encounter suspicious costs, go to the bank and ask for full disclosure. Take your liberties, keeping in mind that as a customer you have the benefit of the doubt. As a further step, you may try contacting a branch manager. The topic of this section gives me reason enough to urge you…read the full agreement whenever you sign up for a service. Never stand between the bank and a sack of money. You won’t realize it slowly shrinking.

If you are a college student reading this, I advise you to be careful regarding what I consider the next generation push. Many universities are working with banks to incorporate ATM-compatible student ID cards. Students are now set up for the double-barrel effect of both high credit and loan debt. While Universities will negotiate for the most favorable setup, they offer little accountability for students’ spending patterns. Meanwhile America is wondering why students are coming out of post-secondary in so much debt. The math is really quite simple. Banks know a percentage of students will be long-term customers, and they also know they will provide many years of high-interest debt repayment. There’s no alternative here; avoid the credit grab. The same goes for those with current long-term debt. Every month you owe interest on interest and gravity has taken hold of your principle payments.

A lot of online brokerages offer much lower fees for trading stocks, bonds, mutual funds and ETFs than any bank would dream of. Along with this, new and improved investment possibilities are starting to appear. Canada, for example, has recently introduced the Tax Free Savings Account (TFSA), a limited contribution vehicle in which capital gains are nontaxable. Add this to RRSPs and other registered accounts, and the capital equation changes. By limiting what you stash in the bank, you can make your money work harder while dealing with the institution less. For any kind of trading or long term investment, the going rates will cost you a fortune. Luckily with the rise of discount brokerages, we can smile a little more when it’s time to take profit.

Even for the very wealthy, saving money and avoiding charges is top priority. Millionaires and tycoons know the ins-and-outs of financial institutions and are successful money managers. There’s nothing stopping you from doing the same. This dissertation takes a look at how banks have a knack of making our money slowly disappear. But as we’ve discussed, there are ways to minimize the damage. You can start to take action right away by utilizing some of the guidelines I have included below. The longer you wait, the more your bank is stealing from you.

Closing tips and suggestions:
Always ask your bank questions
Always read disclosure statements
Try to maintain the minimum account balance
Know the steps to avoid overdrawn fees
Find out what’s billable and what’s not
Make largest debts first priority
Read your transaction statement regularly
Make use of registered investment accounts
Ask a financial adviser about better options