Five Tips for Nabbing the Best Bank Rates
Rock-bottom interest rates. High-yield savings. No intro APR.
Such offers are plastered across windows, brochures, billboards and mailings as banks compete ever harder to get your cash. The disappointment sets in when you realize that you, like most people, didn't qualify for that home-equity loan at 4%. Or that the savings account with 7% interest is available only to those who are investing $100,000 for at least five years.
Asterisks and fine print are a bummer.
However, these situations separate the wheat from the chaff. There's the customer who accepts the terms without question and takes the deal at an unfavorable rate. There's another who throws up his hands and walks away. Then there's the savvy consumer who comes armed with research and negotiation skills and works the advertising to his advantage.
The teaser rate can be your worst enemy or your best friend. Here are some tips to negotiate the best rate at your local branch:
1. Do your homework.
Any customer who wants to do business with a bank needs to do some research first.
It's important to have all the relevant information about yourself that the bank will consider. You should have figures on your income, assets and overall record to figure out a ballpark range of rates you'd be offered. Pull your credit report and keep in mind that any black marks -- late payments, meager FICO score, defaults, bankruptcy -- will hurt your chances of getting a loan, much less getting a good rate.
You should also know the market both locally and nationally. Lenders are more wary of risk today since many have been burned by defaults and delinquencies, particularly on subprime loans. As the
Federal Reserve
has cut its interest-rate target, the rates on products like savings accounts, CDs and money-market accounts have followed.
At the same time, it's important to know how your community fits into the picture, since some local economies and housing markets are faring better than others.
2. Leave no stone unturned.
Use all the resources available to you on the Web, in person and through word of mouth to find out what rates are available.
Read and save the mail-in offers and brochures from local banks. Check the Web sites of banks you're considering and call up their customer-service lines for quotes. Visit sites like
, which highlights the best rates in your area down to the zip code. Ask nearby friends, neighbors and family members for their suggestions.
"If somebody's recently gotten a loan, ask about their experience," says Tim Ryan, a senior research director at J.D. Power and Associates, which has performed polls on customer satisfaction with banks. "The Internet is great, but at the same time, there are a lot of things you can't really portray."
Ryan also suggests visiting credit unions, which are member-owned and operated and often have better rates than bigger banks.
3. Be realistic.
If fixed 30-year mortgage rates are hovering around 6% for those with stellar credit, don't expect a rate far below that level -- especially if you've got a bankruptcy and a bunch of late payments under your belt. Similarly, with savings rates mostly below inflation, don't expect to earn a pretty penny on a six-month CD.
Banks are eager to take your money but are also being very careful about how they do business. Major lenders are generally not considering anyone with a FICO score below 620, according to Ryan. If you have a weak credit score, you might still be able to get a loan with your existing bank, but you'll have fewer bargaining chips.
Even those with strong credit scores shouldn't expect something out of the realm of reality.
"Be willing to accept the fact that you're not going to get exactly what you want," says Bruce McClary, spokesman for Clearpoint Financial Solutions. But with the right information and negotiating skills, "you're going to get close."
4. Negotiate
Keep in mind that nothing is set in stone. Once you've shopped around and decided on a bank to negotiate with, arm yourself with competing offers. Gather up all the print-outs, brochures and quotes you've collected and use them to your advantage.
If the bank representative offers you a loan at 8% interest, but the bank's Web site offers 7.25%, pull out the printed proof. Better yet, if the bank down the block offers 6%, pull out the competing brochure. Keep in mind that those are teaser rates, so you might not get a full point knocked off, but the threat of taking your business elsewhere has some sway.
"The customer is in the driver's seat," says McClary. "Just because they have a rate listed or published -- you never really know until you ask."
McClary also suggests using arguments that are compelling from a bank's point of view. Noting more attractive offers from the competition or the potential for more business down the line can move the dial in your favor.
There are two tactics McClary warns against: Stating the length of time you've been a customer or being argumentative.
"Don't negotiate out of anger -- that will derail everything," he says. "Pour on the honey."
5. Don't be afraid to walk out or switch banks.
Negotiating can be tough, especially if it's your first time.
"It's like giving a speech or playing a sport," says Ryan. "The more you practice, the more comfortable you are doing it."
Still, even beginners should never be pressured into a deal they're uncomfortable with. Don't be afraid to go home and sleep on it, or make good on a threat to sign with the competition -- even if that means leaving a bank you've been loyal to for years.
"People certainly shouldn't feel pressured, because they're in control," says Ryan. "Don't be afraid to say, 'I'm going to look around a little more' or 'I'm going to walk away.'"