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10 Things Your Banker May Not Let You Know

When you keep your money in a bank, it may not be used to its maximum potential. And that’s just fine with your banker, since a bank is a business. It’s supposed to make as big a profit as possible. If you want to make the most of your money, you will have to watch out for yourself. Here are 10 things your banker won’t tell you:

1. You May Not Be Eligible for the Advertised Rate

Whether it’s for a rewards checking account, or for a loan, you might not be eligible for the advertised rate. There might be a minimum account requirement, or the best loan rate may come with a rather high credit score requirement. When you go in, bank employees will try to sell you on a less attractive rate.

2. Some Banks Drop the Yield on High-Balance Accounts

You should read the fine print regarding high yield savings accounts and some other types of deposit accounts, because in some cases there is a point at which the yield begins to head down. Some banks, once your account balance reaches $50,000 (or it might be another amount), will switch you off the plum yield you have been enjoying. Make sure you understand the terms of the account, especially if you plan to build up a large balance.

3. You Could Lose Out on Interest During a CD Grace Period

In some cases, if you close a CD during the grace period, you may not get the interest. Losing interest during the grace is not a concern if you let the CD automatically renew. If you change the CD during the grace period, the interest earned will likely also be paid; check your bank’s policy.

4. An Automatic CD Renewal Can Result in a Lower Rate

When your special rate CD renews, it could do so at the current rate, rather than a special rate you have been enjoying. In some cases, this could mean that you end up with a substantially lower yield. Find out if you can renew at a special rate if you are concerned that your automatic renewal will result in an automatic yield reduction.

5. You May Not Have Access to Your Entire Deposit Immediately

Be aware of the possibility of a hold. This is when a check is held in your account, but you don’t have access to the money, until your bank can verify that the funds will be paid by the payer’s bank. You earn interest on this money after the clear period, when the money is debited from the payer’s account and credited to yours, but you may not be able to access it for as many as five to 10 days.

When you make some deposits into interest bearing accounts, you might discover that you do not start earning interest on the money until after the deposit clears, so you could lose a couple days’ worth of interest on your money.

6. If You Reject a Rate Hike on Your Credit Card, the Account is Closed

Credit card interest rates go up regularly, and you may not want to pay them, especially if you still have a balance. You have the right to reject an interest rate hike, though, and pay off the balance at the old rate. However, when you take this option, your account is closed and you no longer have access to it. Even if you are not at the limit, the immediate closure means no more buying things with that card. If you have automatic debits for bills, or other concerns, you will want to make sure your money is moved before rejection an interest rate hike. You should also check your credit report afterward, to make sure that it reflects that the account was closed at your request, and not initiated by the creditor.

7. You Can Have Some Fees Waived by Asking

Banks make big money on fees. From overdraft fees to ATM fees, such charges are big business. So banks like you to keep paying fees. However, some banks have policies about waiving some fees. You can usually get one or two fees waived each year – just by asking to have them waived. You can also look for financial institutions that refund ATM fees, or that charge lower fees for accounts.

8. Overseas Transactions Can Cost You Big

Many people don’t think about the fees that can result when they travel overseas. You can spend up to 3% (or more) of your purchase price just on currency conversion and other fees when you use your debit or credit card in another country. Additionally, the ATM fees are often heftier when you withdraw cash. You can reduce your overseas ATM fees by finding out if your bank has a partnership or an agreement with a foreign bank.

9. A Smaller Bank or a Credit Union Might Be Better for You

While this isn’t always the case, you might find that your money is better off with a small bank, or with a credit union. We are sometimes inclined to think that bigger is better, but the bigger banks sometimes offer less attractive rates, as well as lacking in customer service. Credit unions sometimes have higher rates on deposit accounts, and lower rates on loans. If you are concerned about access to your money when away from home, you can find out if your community bank or credit union belongs to a nationwide co-op that allows you access to funds at member financial institutions. In some cases, community institutions will refund the ATM fees paid while out of town. Shop around, and go with the financial institution that works best for your personal needs – whether big or small.

10. You Might Ding Your Credit Score When Opening an Account

One of the things that your banker may neglect to tell you is that opening a deposit account can result in a hard credit inquiry. This is the kind of credit inquiry that affects your credit score. So, opening a new account might result in a slightly lower credit score if you are not careful. Be sure to ask the institution what sort of credit impact your account application will have.

There are certainly other things that your banker won’t tell you. Can you think of a few things your banker may not be telling you?

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Previous Comments
  |     |   Comment #1
How long will the ding to your credit score (when opening a new account) last on your credit score? I was one of the people who managed to get a Navy Fed account (through USAFed), joining just as they were merging. I heard on some forums that they did a hard credit check, whatever that means. I have stellar credit, and am wondering how much -- and for how long -- opening new accounts will remain on my record. Because besides NavyFCU, I also recently opened an account at another bank (for both a CD and savings). Thanks

  |     |   Comment #2
One item of note for #2 is the bank will not always tell you about changes in high yield/high balance accounts - at least not directly.  I have had multiple banks/CUs drops rates or caps on reward checking accounts was was never directly notified by them of the changes.  Their usual excuse was 'we put the new rates on the web page'.  I told them that the main page may or may not notify the user since the 'ads' for the accounts are usually some kind of script with may not work in all browsers and that their excuse is disingenuous at best since they obviously email their account holders monthly (at least) and could easily notify their users via that email list.  If the same thing happened with a credit card account, they be required to notify users.  


Truth be told, they want to keep the money in their institution yet reduce costs by hoping customers don't notice for months (if at all) that they changed the accounts.  If you hold $40,000 in a reward checking account at 4% with a $40,000 cap and they drop the cap to $10,000, that is $30,000 they are paying almost nothing to hold which would save them about $100 a month if the account holder isn't aware.  I don't know if there is anything requiring them to do more than passively notify account holders (at least the banks don't think so).
  |     |   Comment #3
A couple of years ago, I opened a CD at Wells Fargo and they dinged my credit - twice.  I asked them to remove it and they did not.  It is still on my credit report.
  |     |   Comment #4
Stay away from Wells Fargo, they'll ding your credit even if you open a saving or CD account with them, don't need to mention when you open a checking or credit card.
  |     |   Comment #5
I've had hard pulls for each CD I opened at one bank. Stupidity, bank policy or maybe both?
  |     |   Comment #6
That's what I don't understand.  Why do banks pull a credit check on a person when they are trying to deposit money into a bank.  We're not looking to take out a lone, we're putting good money into their banks.  So why do they feel a credit check is necessary?
  |     |   Comment #7
Hard credit is pulled for three reasons:

A) To tell the whole world that you are now their customer or tried to be theirs.
B) To ding your credit score so you will not be able to jump ship immediately.
C) To see where the money are coming from and who you have been customer with and for how long (are you are rate chaser or loyal, should they pumper you or treat you like dirt).
  |     |   Comment #9
Isn't this real ten things that you could find out by reading the terms or just bothering to ask?  We can't expect bankers to spoonfed us.
  |     |   Comment #16
Must be a banker, huh?
  |     |   Comment #11
The propensity of some banks to pull hard credit inquiries for opening even deposit accounts with them, regardless of how much business you already do with them, is amazing. Also, on the subject of hard credit pulls I have to take exception to Anonymous #9. When you are opening an account, Wells Fargo bankers either cannot or will not answer correctly that a hard pull will result.

Anonymous #1, the USA Fed inquiry should cost you 5 points on Experian for six months, and essentially nothing after that. If you did not have to submit a credit app to NFCU, there would be no other pulls for the Navy. As to the other bank, it may not have hard-pulled you, and if it did, it may not have done so on Experian but instead used Equifax or Transunion. You could sign up for a free trial of a credit monitoring service to check all three reports if you really want to know.
  |     |   Comment #12
Probably a dumb question, but why would my credit score be negatively impacted by a bank doing a credit check on me.  Don't the credit reporting services classify inquiries by type -- mortgage loan, car loan, etc.?  It seems strange that an institution would care about my credit if I'm providing money.  (I agree with #6.)
  |     |   Comment #13
Our credit union pulls credit for new customers/ members for two reasons. The most important is to check for fraud and bad debt. It may seem counterintuitive that we would check for bad debt when opening a deposit account, but we have seen many people write bad checks or deposit bad checks, or commit ATM fraud, then take the money and run.  If someone has done this in the past, it will be shown as a bad debt on the credit report. We can also see if someone has abused a checking account in the past with charge-offs from other institutions. We also use the credit report to verify identity (particularly a Social Security number match).  We do not pull credit on existing customers unless they are asking for a loan. Hope that gives some insight.
  |     |   Comment #14
I currently work for a Credit Union and we do not pull a credit report if you were just opening an account. There is a separate program that allows us to check members banking history without it hurting your credit score. The only time we pull a report is if you apply for a loan and you are told up front.
Former Banking
  |     |   Comment #15
To current bankers: the reason we (management) tells you that we do it for fraud reasons is you buy it, you can repeat it, it doesn't make us look bad.  And, most customers will believe this.

To consumers: if you have bad credit we can't sell additional products to you, very profitable products like credit cards, mortgages, car loans, LOC etc.  So, we dont want you.  Truthfully, your credit has nothing to do with a deposit account (Chex verifies past fraud), its about profit.
  |     |   Comment #17
Thank you for your honesty!

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