savings

Banks Woo Loyal Customers

They’re seeking a monogamous relationship. But you might be better off playing the field.

Being a bank customer can be a little like going out with someone who only wants you for your money.

But if you’re willing to commit to one bank with a chunk of cash, you may find yourself being courted in style. The country’s largest banks offer their most attractive pricing and perks to customers who have tens of thousands of dollars in linked accounts: checking, savings and investment accounts, loans, and credit cards. Benefits typically include access to enhanced customer service (sometimes with a dedicated banker or team), breaks on fees, higher interest rates on bank accounts, and lower rates on loans.

Banks cultivate relationship banking because it’s profitable for them if customers keep piles of money in several types of products. By contrast, depositors who maintain small amounts in solo accounts are more likely to cost the banks money. And drawing more business from current customers is less expensive than recruiting new clients, says Greg McBride, senior financial analyst at Bankrate.com. "The financial industry has been focused on increasing what they call wallet share -- earning more of each customer’s total business," says McBride.

If you crave better service and the convenience of keeping your finances under one roof, a relationship-banking package may be the way to go. But if you’d rather get the highest available yields, lowest loan rates and best brokerage options, and you don’t mind keeping track of a variety of accounts at different institutions, you’re better off banking a la carte.

Commit to a relationship?

To get the best benefits at the biggest banks, you’ll need to tuck at least $25,000 into relationship accounts. In return, you get priority customer service, often with a dedicated phone number, as well as the potential to earn higher rates on deposits and bigger rewards on credit and checking accounts. You also get breaks on checking overdraft fees and charges for account services such as money orders, cashier’s checks and wire transfers.

Hands-on investors may appreciate the commission-free trades in self-directed investing accounts (up to a monthly or annual limit) that Bank of America provides to its Platinum Privileges clients and Wells Fargo to its PMA customers. You may also get a break when you take out a mortgage or other loan. For example, a member of Citibank’s relationship service, Citigold, can get up to $2,500 off closing costs or 0.375% off the interest rate on a first mortgage, depending on the size of the client’s total Citigold balance.

The largest banks also have private divisions that offer exclusive benefits and wealth-management services to the very well heeled. For instance, Chase customers with total assets of about $500,000 to $5 million who are willing to keep at least $250,000 with Chase are eligible for Chase Private Client, which includes access to a team headed by a dedicated banker and a J.P. Morgan adviser. (Chase expects to expand Private Client to all of the bank’s U.S. markets by the end of 2013.)

Citibank provides its high-level customers with access to events, says Venu Krishnamurthy, president of Citigold Wealth Management. Those customers may include members of the Citigold program, which is aimed at clients with about $100,000 to a few million dollars in assets, as well as the wealthiest customers who use Citi’s private banking service. Recent benefits included tickets to the Art Basel art show, in Miami Beach, Fla., and a discussion of economic trends with former OMB director Peter Orszag, now a vice-chairman of Citigroup.

But you don’t always need to come up with big bucks to qualify for perks. PNC Bank, for instance, offers a variety of packages with manageable minimum-balance thresholds. To avoid the $10 monthly fee for its relationship rewards Virtual Wallet With Performance Spend account, you must have a total of $1,500 in checking and savings accounts; make a $2,000 monthly direct deposit; or have a combined balance of $10,000 in several accounts, including certificates of deposit and mortgages. Perks include free check orders and up to $8 in monthly reimbursement of ATM surcharges by other institutions.

Playing the field

Consumers have grown accustomed to going it alone, however, turning to the Web to pick and choose their products. And banks have responded to demands for more-transparent pricing and fee disclosure. In a recent Deloitte survey, customers preferred a banking model that offers straightforward pricing on individual products rather than one that folds price breaks -- whose specifics may not always be clear -- into a relationship.

If getting the best interest rates on savings is your priority, parceling out the money to top-yielding accounts is probably your best bet. Even the preferred rates that larger banks offer within their relationship packages usually don’t measure up to top yields found at many online banks, community banks and credit unions. For instance, the highest checking-account rate offered within Wells Fargo’s PMA Package is 0.10%. But you could earn as much as 3% with rewards checking at some credit unions (to find a credit union near you, go to www.culookup.com or www.asmarterchoice.org).

The same goes for another common relationship perk: free non-network ATMs. Among Chase’s checking packages, for example, only Premier Platinum, which yields 0.01% on checking and requires a $75,000 minimum balance among qualifying accounts, offers customers unlimited, no-fee ATM transactions; it does not, however, reimburse fees that ATM owners charge you. For comparison, online Ally Bank requires no minimum deposit on its free Interest Checking account; pays 0.4% or 0.75% interest, depending on the balance; levies no fees for ATM transactions; and reimburses other banks’ ATM fees.

You may be able to get some of the benefits of relationship banking without tying up most of your money in one place. For example, a bank may waive its monthly account-maintenance fee if you sign up for direct deposit, says McBride. According to Bankrate.com’s 2012 Checking Account Survey, 56% of checking accounts waive fees if you meet such a requirement.

For many people, working with a regional bank or credit union may present greater opportunities for tailored guidance and face-to-face interaction. Wherever you choose to take your business, be open with your bank about your expectations, says Michael Ruckman, chief executive officer of Senteo, a consulting firm that works with the banking industry. He cites his own experiences as a client of one major bank’s private services. After returning from living abroad for several years, he asked his bank for a meeting to get reacquainted. When bankers started the meeting by asking Ruckman to pinpoint his appetite for risk and how much he would like to invest, Ruckman requested that they get to know him better first by discussing his earnings, his retirement expectations, plans for his children’s education and so on. "If people want respect from their banks, I think they need to demand it," he says.

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