Can You Negotiate Savings Rates With Your Bank?

They say everything in life is negotiable. So, with that in mind, I decided to see just how far I could get trying to negotiate a better rate at the bank.

To start, I had some money that I wanted to keep safe over the next 12 to 18 months. That meant no stock market or other risky investment. Before approaching banks, I took a look at the best online rates to serve as a benchmark and a negotiating lever. I also felt a bit pessimistic. Because banks are awash in cash following the financial crisis, now is a particularly difficult time to ask them for extra yield or perks. But I wanted to try.

As a first step, I contacted several banks via media query to see if they wanted to talk about negotiating with customers. Charlie Crawford, CEO & Chairman of Private Bank of Buckhead provided some useful insight. He told me that:

“Consumers should know that most financial institutions, and particularly those with a high-touch service model, are looking for a "total relationship;" that is, your bank wants to hold your accounts and help you with other products, but it also wants an opportunity to lend you money, whether that is through an SBA or other business loan or for an automobile or home loan. Rate shoppers who have a CD at one bank, a checking account at another and a mortgage at yet another may not actually save money because they are not taking advantage of a *total banking relationship* in which a banker who actually knows them tailors a menu of services just for them and works with the client to ensure a "win" for all parties on an ongoing basis. If a banker can work with a client on that total relationship, they may be more apt to waive fees wherever they can.”

In other words, the more business you bring a bank, the more they will reward you. This is called relationship banking.

According to Mr. Crawford, “there is room to negotiate with a bank if rate-shopping on one product is not your ultimate goal. But if you are just trying to get the best rate on one product (say, a CD) without looking at the big picture - the total-banking relationship I talked about - a bank likely will not be able to work with you on fees and such.”

Testing Negotiation Out in the Field

As a second step, I wanted to take the money I wished to deposit, and shop it around to see what banks would be willing to pay. I visited three banks –a small community bank, a medium sized regional bank, and a mega-bank.

For each of these banks I told them I had money to deposit, I wanted to keep it safe for 12 to 18 months, and that I had already researched rates for the online banks.

Community Bank

The community bank was eager for my business and thought that a special 15 month CD would be the right product. The CD rate, although high for brick-and-mortar standards, was significantly below some of the best online savings rates, nevermind the top CD rates. I brought this up and asked if they would be willing to negotiate the rate. I also told her I had a personal account which I’d be willing to move (true) and a business account (true). She first tried to convince me that opening an online account was not the best option for me because I didn’t have access to my money. For some people this might be a valid concern but I am comfortable online and don’t mind sending my cash into cyberspace. Then, she did tell me that if I deposited enough money and brought my personal and business checking accounts over, she could get her regional manager to discuss the rate. Bingo. I didn’t want to escalate the conversation yet, since I was still in research mode but at least I knew there was an opportunity to negotiate.

Overall, speaking with her was a very pleasant experience and I appreciated her willingness to entertain a negotiation based on what I brought to the table.

Medium Sized Bank

The medium sized regional bank could not compete in any way with the online rates. The banker made a half hearted effort to convince me that a local bank was better than online. She told me that if I wanted to get an “online like” rate I would need to speak to their investment advisor. Of course, investments usually mean a potential for loss and so I was not interested in that. No negotiation. She did try to sell me a checking account and home equity in the process though.

Mega-Bank

I walked into the mega-bank, sat down with the Assistant Branch Manager and told her my story. The bank’s rates were extremely low. I told her the online rates and she smiled and told me that they can’t come close. Game over. I asked if they negotiate – no. I told her I’d be willing to consider bringing them more business – no. She was very polite but it was clear that nothing I could do was going to get me a higher rate.

Bottom Line: Banks aren’t desperate for your cash so they are not eager to negotiate. They do want your lending and checking business so that is the leverage you have. And based on my three bank sample, the smaller banks seem more willing to negotiate than the bigger banks. The mega-banks – forget about it.

Have you negotiated successfully with a bank? Do you have any useful tactics? If so, please help the community and share them below.