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Better CD rates with private banking

By Claes Bell ·
Monday, August 29, 2011
Posted: 4 pm ET

One of the highest priorities for retail banks these days is cultivating a broad relationship with customers, especially customers of the well-heeled variety. To do that, they've established private banking services that offer personal service and sweetened rates on products ranging from investment management to mortgages.

If you're a CD investor fed up with low CD rates and fortunate enough to have the assets to qualify for private banking services, you may be may be able to get a better deal on a CD than the bank offers to regular rank-and-file retail customers. I wrote an article last year that quoted a couple of people who were working in private banking or had worked in it in the past saying as much:

Higher rates on deposit products like CDs and approval for that hard-to-get jumbo mortgage refinance become much easier to get, Farber says.

Baughman says that when he worked at BB&T, "everything was negotiable" for private banking customers, including the bank's stated fees in terms of closing costs for mortgages, closing costs for home equity lines or retail loans.

"There were interest rates on CDs, checking accounts, depository accounts -- those were all negotiable, and you had a wider range of negotiating power to go out and capture those folks," Baughman says. "If you could make a case for it, the sky was the limit."

Of course, you'll want to take a look at the fee structure to ensure you're getting a good deal on every aspect of a private banking relationship. A few basis points extra added onto a CD isn't going to make up for unreasonably high expense ratio for managing your retirement portfolio, for example.

Still, if you've got the money to qualify and the rest of the bank services you'll be getting come at a reasonable price, generous CD rates can be a powerful sweetener in a market where one-year CDs are averaging a yield of just .41 percent.

What do you think? Is private banking a good deal? Are above-market CD rates a powerful incentive for high-net-worth customers?

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