How To Get The Best Banking Rates

By Ronald Kimmons. May 7th 2016

As with most other industries in a free market, the banking industry is highly competitive. Banks do whatever they can to offer higher savings account rates, lower interest rates on credit, and special client perks that will bring business to them instead of to their competitors. Too often, people go to banks with the attitude that the bank is doing them a favor, which is far from the truth.

Banks are for-profit institutions, and they make their profits from people who have accounts with them. For this reason, not only should people look at themselves as clients and consumers, but they should also shop around and compare the offers that various banks make. In many cases, even if the first deal looks good, there may be an even better one around the corner. Just 1 percent of difference can often have a huge impact on your financial future. Here are some tips on how to get the best banking rates from your financial institution.

Best Rates On High-Yield Checking Accounts

Some banks charge monthly fees for offering you a checking account. Other banks, however, pay you to open a checking account with them. These payments, determined as a percentage of one’s balance, can sometimes be even higher than what people get from savings accounts.

Keep in mind, to enjoy the benefits of a high-yield checking account, you usually have to follow certain rules. For instance, you may need to make a certain number of debit card transactions per month to qualify for the interest payment. This is because your bank makes a little money every time you make a purchase with the debit card that is tied to your account.

Also, there is usually a limit to how much you can enjoy interest payments. For instance, your account may pay 3 percent interest, but only for a balance of up to $50,000. (For information on other types of checking accounts, see Understanding The Different Types Of Checking Accounts.)

Establishing A Relationship For Better Rates

Banks like to keep customers. If you have an established relationship with a bank, going back to that bank for your future banking needs may qualify you for more competitive rates. For instance, if you have a checking account and a credit card through a particular bank, and if you have a history of keeping money in your account and keeping your credit card paid down, that bank may offer you an exceptionally low interest rate on your next loan.

Online Shopping For The Best Banking Rates

Various online platforms allow Internet surfers to quickly and easily browse different banks’ offers on loans, credit cards, savings accounts, checking accounts, etc. By comparing the terms and metrics of different banks’ offerings in this way, it is relatively easy to pinpoint the better deals that are available. However, be aware that the banks represented in such listings are almost always going to be nationwide banks. While smaller, local banks tend to not be listed, they may actually offer better deals than the nationwide operations. (For information on comparing checking accounts from different banks, see How To Compare Checking Accounts.)

Local Shopping

To find the best banking rates from smaller banking operations, check your local newspaper – or simply pay attention to the signs that various banks display. On this line of thought, consider your local credit unions. Because they enjoy various tax advantages, credit unions are often able to offer more competitive rates than what for-profit banks can offer. The disadvantage of going to a credit union, though, is that they often do not offer the same spectrum of products and services that normal banks offer.

Making Threats

Of course, there is no need to be ugly about it, but if you feel that you can get a better deal elsewhere, do not be shy about making this clear to your bank to earn better banking rates (for information on swapping banks, see A Guide To Switching Banks). For instance, a credit card balance can easily be transferred from one card to another. If you feel that your interest rate is too high, contact your bank and tell them that you are going to make such a transfer and cancel your card if the rates do not go any lower. In many cases, banks are willing to work with clients who make such threats. The same can be said for loans: many banks would be happy to pay off borrowers’ existing loans with new loans that offer slightly lower interest rates.

Read The Fine Print

Banks often rely on highly vaunted special rates and promotions to get people in the door. Some banks even pay people to open checking accounts with them. When you sign up for such accounts, though, make sure that you understands all of the specifics. Ask questions. For instance, is there a withdrawal penalty on that savings account? Does that free checking account come with a credit card that charges an annual fee? What will you be charged if your account is overdrawn? What are the ATM fees? Will you be penalized for paying off your loan early?

In some cases, banks offer free products because they know that, statistically, they can profit from the fees they will charge when account holders overstep any of the large number of boundaries. Before you sign anything, read carefully and ask questions. The terms for an account can be just as important as the number beside the % symbol on the sign out front.


More in category

Related Content