Keep Up With Bank Rates and Other Macro Conditions: A Year-End Checklist

The banking industry is going through a period of rapid change. A combination of financial pressures, market conditions, and regulatory developments is leading many banks to reassess their fees and policies. While you may not want to shop around for a new bank every time your bank changes something, the end of the calendar year is a good time to run through a checklist to see if your bank is still giving you a competitive deal.

The following are some key questions to ask about where you hold your CDs, savings accounts, and money market accounts:

• Is my bank rate still competitive? You don't necessarily have to have the top bank rate out there--which institutions offer the highest interest rates can change frequently, and there may be other aspects of the relationship that are important to you. However, you want to make sure your bank rate is at least competitive with the marketplace in general. Money-Rates.com makes it easy to see what average CD rates, savings account rates, and money market rates are, so you can compare your bank rate with the appropriate category. If you find that your bank rate has fallen below average, it may be a sign to shop for a better deal.
• Does my balance qualify me for a better deal? Aside from shopping between banks based on interest rates, one way you might qualify for a preferred bank rate is if your balance has grown to certain threshold amounts. These thresholds are usually at round numbers such as $10,000, $25,000, $50,000, $100,000, etc. If you have passed one of these threshold amounts over the past year, see if your balance qualifies you for a better interest rate at your bank. Don't assume that the bank will automatically put you in that higher-tier account when your balance is big enough--you might have to initiate the change yourself. Also, use this as an occasion to see what kind of deals other banks are offering on large-balance accounts.
• Am I in the right type of account for my needs? As financial circumstances change, you might find that you are drawing on your account more frequently than you had originally intended. If this is causing you to incur activity fees, you might want to consider another type of account. For example, you may switch from a CD to a money market account. Conversely, if you find that your savings or money market account balance is building up well beyond your immediate needs, you may want to consider diversifying into accounts offering higher interest rates for a longer deposit time horizon.
• What other benefits am I getting? In addition to a good bank rate, having a significant savings or money market account balance might qualify you for other benefits, such as free checking. With checking account maintenance fees on the rise, this is a good time to make sure you are getting the most out of your total banking relationship.

Because banks are coping with a great deal of change right now, bank rates, fees, minimum balance requirements, and other account characteristics may all be different from terms you signed on for originally. The irony is that, in bad times for the banking industry, some banks have been forced to focus so much attention on their problem customers that they forget about their good customers. Running through this year-end checklist is one way to make sure you are not taken for granted.

Source:

Shopping Smart for Bank Accounts in Northeast Ohio • Ohio PIRG: http://ohiopirg.org/OH.asp?id2=4748&id3=OH&

Showing 0 comments | Add your comment