Have a relationship with the bank!

Posted: November 20th, 2008 | Author: Mo2 | Filed under: Banks, Finance | Tags: bank, Credit, credit card, Finance, Financial Institutions, GICs, Investing, Mutual Funds, Relationship with bank, saving |

Everyone dreads the bank. The bank makes so much money that it’s almost makes people sick looking at the numbers (well not me). Banks are necessity that’s why they make money; their very presence will never go away. Why? Because 90% of the people in our society are careless with money and by putting their money in the bank they can at least feel safe.

Of course, this is a joke. The banks aren’t what they used to be; they offer more services than most can understand. By having a strong relationship with the bank it can a very advantageous thing. You need to look beyond the monthly fees and start thinking about ways to use the bank in your favor.

In this article I’ll talk about some things you need to strengthen your relationship with the bank and how that can benefit you. Of course, there is more than one way for everything and I am only giving you examples, be creative!

Credit Rating
Having a strong credit rating can help you with the bank. A quality credit rating means that the bank can trust you to a certain extent. It takes some work to have an exceptional credit rating and you really should be careful of what you do with your credit. Which means if you have a credit card, pay off your balance in full every month and never default on any payments no matter what.

I sure hope you aren’t because it’s not only hurting your credit rating it’s one of the dumbest things to carry a balance on your credit card and to default a payment on a loan. One word hint, interest I’ll get into this more in another article. You can read my credit card article to get a good idea as to why you shouldn’t be carrying a balance on your credit card.

Have assets both liquid and illiquid
There’s more than one reason to save and that’s to help you build your relationship with the bank. By having any kind of assets it strengthens your case when you actually do need a loan from the bank. It means that you can back up your promise by showing that you were financially responsible enough to collect assets that are actually worth something in this world of ours.

Yes that means that the Gordie Howe rookie card and Aunt Patsy’s painting are assets although these are considered somewhat illiquid assets. I’m talking more on the lines of savings accounts, term deposits, bonds, stocks, mutual funds, and real estates just to name a few. By having a combination of these assets also means that you are well diversified in terms of risk and can also be favourable for you.

Buys some Guaranteed Investment Certificate (GIC) and mutual funds
The bank wants you to buy some of their products because they need to make money off of you. By investing in their products that means you are worth that much more to them. Also, by buying their investment products you are showing them that you are a longer-term client and that’s a very big plus in terms of building a relationship with the bank.

Have a strong source of income
Income is important because you need to borrow money you need to show that you can make the monthly interest payments on the loan you are taking. But if you have a six-digit income and are a dummy in terms of finances then the bank will not lend you money.

So what’s in it for you?
I know it seems like a lot of work to do all that just to build a relationship with the bank. But honestly, did any of the above things really do you any harm? Not really, if anything it means you are financially responsible and are investing for the future hardly a bad thing. The more make you stronger financially the more the bank will like and it actually is a win-win situation.

Lending Needs
When you go to the bank to lend for anything whether if it’s to buy a car or to start a business beyond credit, your lending rate (if they lend money to you at all) depends on your relationship with the bank. If you can prove to them that you are worthy of a loan and a loan at a great rate then you will get one but it all goes back to making sure that you have a strong relationship with the bank.

Mo2 Thinks…
Having a strong relationship with the bank is important for anyone unless you like relying on a piggy bank to take care of your finances. You have to deal with the bank either way so why not be friendly with them? Instead of complaining about their monthly fees, which at first glance might seem high, try and take advantage of what they have to offer. Although many bankers don’t know what they are talking about, there are handfuls that do. You need to sift out those that have no clue and find those that can help you out in terms of your financial wealth.

It’s pretty easy to do actually. What you first need to do is educate yourself in terms of financing and investment. Easy to do because you’re reading my website *grins* and I’m sure you do other reading. Even in the banks there are salespeople that have no idea if what they are selling is any good and this is when you should be asking quality questions to see if they really know what they are talking about.

For example, if a banker is suggesting to you to buy a certain mutual fund, ask them if it fits your risk profile, your long terms goals, and what the MER for the fund is. That’s just a start, keep frying them with questions until you are satisfied that the person you are talking to knows what they are talking about and they should because they are getting paid to know what they know. If the person doesn’t you should be reporting them to their manager, it’s actually kind of embarrassing if you know more than the person that is trying to sell you something.

I know I’m making a pretty bad case for the banks there. But trust me there are some exceptional people in the banks that just make you go, “Wow!” And these are the people that you should look for because if you can build a strong relationship with these people they will go above and beyond and help you with more than just your banking needs. These sorts of people are so knowledgeable and sometimes have great connections that they can help you with other things outside of the bank.

You don’t need a million dollars to build a relationship. Just start small. Invest in some mutual funds and start a small RRSP or 401k for yourself and just keep adding to it. Show some commitment to the bank like you would with a relationship. It takes small steps in the right direction to make yourself financially healthy and by building your relationship with the bank; you’re definitely helping yourself and well them too.

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