Harvard FCU Blog

Beyond Banking: How Building a Relationship with Your Financial Institution Benefits You

Written by GreenPath Financial Wellness | Aug 7, 2024 3:38:15 PM

For most of us, the relationship we have with our financial institution feels purely transactional—depositing paychecks, withdrawing cash, and managing bills online in the space of a few clicks. However, forming a deeper relationship with your bank or credit union can unlock benefits that go beyond simple transactions.

When you take the time to establish a relationship with your financial institution, you signal your willingness to engage in a two-way dialogue. This can lead to more personalized service, tailored financial advice, and opportunities for financial growth.

Tap Into Educational Resources

One of the key benefits of building a relationship with your financial institution? Access to valuable educational resources. Many banks and credit unions offer free workshops, webinars, and one-on-one consultations designed to help you strategize short- and long-term goals.

A free online workshop on building credit could be invaluable if you’re looking to purchase a home or a vehicle in the coming months, as an example. Schedule a meeting with a financial advisor at your institution to discuss your plans and see how they can support you.

Optimize Your Spending & Savings

Checking

Think beyond basic checking accounts and explore options offering rewards or dividends. Some checking accounts offer cashback on purchases, meaning you earn a percentage of your spending back as a reward.

This can be advantageous if you make frequent purchases using your debit card. For example, a checking account with 1% cashback on all purchases means that for every $100 spent, you would earn $1 back. Over time, these rewards add up, effectively reducing your spending or contributing to your savings.

Additionally, some checking accounts offer dividends on your balances. These accounts pay you a small percentage of your average balance as a dividend…similar to how interest works on savings accounts. The more money you keep in the account, the more you earn.

Savings

High-yield savings accounts are another way to make your money work harder for you, offering significantly higher interest rates compared to standard savings accounts. For instance, if your bank offers a high-yield savings account with a 2% interest rate and you save $5,000, you could earn $100 in interest over a year.

High-yield accounts are especially useful for setting aside funds for short-term goals or emergency funds. You get the twofold benefit of having a safe place for your money while earning a competitive return.

Certificates of Deposit (CDs)

Financial institutions offer various CD options, all insured for safety, ensuring your money grows securely. CDs offer higher interest rates than regular savings accounts in exchange for locking your money away for a set period. (For example, a 3-year CD with a 3% interest rate on $10,000 earns $300.) Here’s how CDs work, at a glance:

  • Fixed Term: When you invest in a CD, you agree to keep your money deposited for a fixed term, which can range from a few months to several years.
  • Guaranteed Interest Rate: In return for committing your money for this period, you earn a higher interest rate compared to regular savings accounts. The rate is typically fixed for the term.
  • Penalty for Early Withdrawal: If you need to access your funds before the CD matures, you may face an early withdrawal penalty, which can reduce or negate the interest earned.

    Utilize Customer Discounts and Rewards

    Many financial institutions pair up with local businesses to provide exclusive discounts and rewards. These partnerships can span a wide range of industries, offering savings on everyday expenses and special purchases (think gym memberships, movie tickets, or dining experiences.)

    Similar partnerships can extend to services such as travel, insurance, and home improvement, allowing you to save money on various aspects of your life. To make the most of these benefits, check the customer benefits section of your financial institution’s website or contact them directly to ask about any promotional offers you can take advantage of.

    Embrace Technology

    According to the American Bankers Association, 79 percent of customers say digital innovations in banking are making services more easily accessible. Financial institutions have made significant strides to ensure their customers have convenient access to their accounts. If you aren’t already, make sure to:

    • Download the Mobile App: Most financial institutions offer mobile apps that let you check balances, transfer funds, and deposit checks from your phone.
    • Set Up Alerts: Use account alerts to stay on top of your finances. You can set up notifications for low balances, large transactions, and due dates for bills or loan payments.
    • Use Online Banking: Take advantage of online banking features to pay bills, monitor transactions, and manage your accounts.

    Boost Your Credit & Earn

    A long-standing relationship with your financial institution can improve your chances of securing credit when you need it. Lenders often consider the length of your banking history when assessing creditworthiness. By demonstrating a consistent financial track record, you can increase your eligibility for loans, mortgages, or credit cards.

    If you’re happy with your financial institution’s offerings, share your experiences with someone on the fence; beyond helping others access the same benefits, many institutions offer referral bonuses when you bring in new customers—a win-win!

    This article is shared by our partners at GreenPath Financial Wellness, a trusted national non-profit.