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

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.

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 homepurchase 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.

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.

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.

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.