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Bundling gets you more bang from your bank

Remember those free toasters and digital alarm clocks that banks used to advertise? Well, the freebies have changed, and they're often much better now.

Banks in search of "total relationships" with customers are offering free checking accounts with loan discounts, investment bonuses, dining deals, insurance incentives and other little financial sweeteners. The practice is often called "bundling," and shopping carefully for a good bundle could work to your advantage.

Because banks are offering discounts or freebies when you have multiple accounts, you can use any banking product you are considering -- for instance, a mortgage -- as leverage to snag something else you want from the bank -- say, a souped-up free checking account.

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The more business you do with one bank, the more likely they are to sweeten the deal.

Mortgage and free checking often bundled

You have the greatest leverage when you take out a mortgage with a bank. Some banks offer mortgage customers a free, interest-bearing checking account with no surcharges -- and even throw in free notary services and free online banking.

Local banks can have surprisingly appealing deals. For instance, Bremer Bank, in Minnesota, North Dakota and Wisconsin, offers first-mortgage customers a homeowner's free checking package with free online banking, no closing costs on a home-equity loan and a year of free overdraft protection. It throws in a $10 credit to any new savings or money-market account and a free financial consultation.

Another typical offer is reduced loan rates on car loans and personal loans for customers with both a mortgage account and a checking account. Farmers State Bank in Indiana, for example, gives homeowners free checking plus one-quarter percent off personal loans. Other banks will go to a half percent off loans if you meet other requirements.

With competition from local banks heating up, some large national banks have been improving their bundled-checking deals, too, especially on the homeowner side.

Wells Fargo, one of the country's biggest banks, offers a homeowner's checking account free for anyone who agrees to have the mortgage deducted automatically each month from that checking account. The account pays interest, and there are discounts on other loans, free traveler's checks, free money orders and free checks.

Wells Fargo rolled out an incentive program to get its checking account customers to consider a Wells Fargo mortgage. So getting a checking account first and the mortgage second can save you a small chunk of cash.

"If a customer has a checking account with us and signs up to have an automatic mortgage payment to Wells Fargo, we'll give them $75 toward closing costs on their mortgage," says Tim Gholson, market president for Wells Fargo in Iowa City, Iowa. "If they purchase two or more products, like a CD, we'll give the customer an additional $75."

Wells Fargo bankers routinely review the accounts of customers who call in for help or who visit the branches, Gholson says.

"It's our job to ask you enough questions to find out what account is best for you," says Gholson. "It happens all the time that you open a free account with basic checking, but once you move, you may have more money with us and so we will move you to an account that will do more for you."

What if you don't have a mortgage, or you're not happy with the options at the bank that holds your mortgage? If you can have your paycheck or even your Social Security check put into your checking account through direct deposit, that can sometimes mean a better version of free checking.

-- Posted: Nov. 16, 2003





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