In an era when banks charge for everything from wire transfers to checking accounts, the offer seems too good to be true: a program with no fees, better rates on loans and deposits, and a "direct phone line to customer service" for help with almost any money-related matter. The only catch: You have to maintain a minimum of $50,000 to qualify.
The offer is from Bank of America, but it's far from the only new package of perks banks are rolling out for their highest income customers now. Citibank promises a $500 savings on home-closing costs as part of its Citigold offering. HSBC's suite of Premier service extras includes a waiver of pesky international money-transfer fees. And most premium options provide better access to customer-service reps
Many banks are now aiming only at high balance depositors, as they claim they make little of their profit from their average customer, and when cheap money is available through the government, there is no need for banks to find new sources of deposits.
But just as frequent fliers must log serious mileage to earn an upgrade, banking customers also "pay" for perks. In this case, that means submitting to the new industry standard for account minimums, which can get as high as $100,000. What's more, the extras aren't always that significant.
Critics charge that because the recent financial reforms made it tougher for banks to profit from lower-tier customers, they're looking to squeeze more from those on the high end. In other words, that red carpet may be a red herring. They're not doing it to provide better service; they're doing it to realign their cost structures, we're trying to show our clients that the more of a relationship they have with the bank, the more they can expect in return, but only if you have significant balances.
If your bottom line is, well, the bottom line, experts suggest comparing a year's worth of perks to the gains of parking the money in a vehicle offering higher interest rates (say, an online savings account) without the large minimums.
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Barry Norman is a contributor to and blogger at firstcredit.net. For over ten years FirstCredit.net has provided consumers free information helping them make sense of credit cards and the financial industry. Whether you are a longtime cardholder or exploring online banking, FirstCredit.net can help you make informed decisions.
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