If you’re like most Americans, you have at least one bank account. You probably use your account to receive your paycheck, cover your living expenses or stash some cash for a rainy day.
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However, you may not be maximizing your relationship with your bank to build and protect wealth. GOBankingRates spoke with Teri Williams, president and COO of OneUnited Bank, to learn strategies that can help improve your financial future.
Where you put your money matters. Financial technology companies, or fintechs, are becoming increasingly popular for their ease of use and special perks.
However, your money may be at risk even if the company partners with a traditional bank. For example, some Synapse Financial Technologies Inc. customers lost access to their funds when the fintech went bankrupt in 2024 — despite their partner banks carrying FDIC insurance. The banks themselves didn’t go bankrupt, so the coverage didn’t apply to Synapse users.
When you do business directly with an insured bank, your cash is safe should the institution become insolvent.
According to Williams, “No one has lost money depositing their funds in a bank account [that has] below the FDIC maximum [balance] — currently $250,000 — since the inception of FDIC insurance in 1933.”
If you have over $250,000 in your account, the excess funds are not covered by FDIC insurance. You could lose that money if the bank goes out of business. Maintaining multiple accounts below the quarter million dollar threshold at different banks ensures all of your cash is protected.
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Keeping all of your money in one bank can be convenient. However, you may want to spread your funds across multiple institutions for reasons beyond FDIC insurance.
Working with more than one bank could give you access to different benefits. For example, one bank could offer a fee-free checking account, while a savings account at another institution may feature a more competitive interest rate. Some banks also offer a welcome bonus when you open a new account, potentially generating a few hundred dollar return on a minimal time investment.
Some banks offer advisory services to help you plan for retirement, invest wisely and minimize your tax liability. You may need a certain net worth or amount of investable assets to qualify for these services, but it doesn’t hurt to inquire about them.
Bank staff can also educate you on the institution’s financial products and recommend those that best align with your goals and preferences.
“Many times, consumers [select] the wrong banking product, paying unnecessary fees or interest on loans and not getting the highest interest on their savings. Your bank can give you insight on how to better manage your money,” Williams said.
On top of retirement planning services, your bank may offer products to help you save for your golden years. For instance, an individual retirement account (IRA) could be a great addition to your investment portfolio.
An IRA builds wealth while providing tax advantages. You fund a Roth IRA with post-tax dollars and then can withdraw the money tax-free in retirement, assuming you’ve had the account for at least five years. A traditional IRA is the opposite: funded with pre-tax dollars and taxed upon withdrawal.
You have lots of options when it comes to where to store your money, so many banks have introduced rewards programs to attract and retain customers. For example, your financial institution may offer cash back when you shop with your bank-issued debit or credit card. Using your debit card to cover $10,000 worth of purchases at 1% cash back puts $100 in your pocket.
Your bank may also make it easy to grow your savings account balance.
According to Williams, some “banks provide great products for savings, including ‘keep-the-change’ programs that allow you to save as you spend by automatically moving your change into a savings account.”
For example, if you use your debit card to buy your $3.50 morning coffee every workday, a keep-the-change program would boost your savings account by around $10 monthly.
While bank-issued rewards probably won’t make you rich, they will add up over time. Plus, if you invest your earnings, they can have an even more significant impact on your bottom line.
Want to learn more about money management? Your bank may offer several educational resources, such as:
Blog posts, podcast episodes and videos about topics ranging from budgeting to investing
Online calculators to help you understand loan costs, time to pay off debt and more
Free events led by financial professionals that go deeper than the online content
One-on-one meetings with bank representatives for personalized guidance.
Visit your bank’s website to get started.
Your bank likely lends money through many financial products, such as credit cards, personal loans and mortgages.
Williams said, “The most important bank product to build wealth is a home loan. Homeownership is where the majority of Americans accumulate wealth over time. [Plus,] given the recent Federal Reserve [rate cuts], home mortgages have become more affordable.”
As an added perk, your bank may offer you a better interest rate simply for being a customer. Even a small rate reduction could save you tens of thousands over the life of the mortgage.
According to Williams, life insurance is a “necessary product to build generational wealth.”
A term life policy pays out a death benefit to your heirs should you pass away during the covered period — generally up to 30 years. Your beneficiaries could use the money to cover your funeral expenses, pay off the mortgage on the family home, fund a college education or take care of anything else they need.
A whole life policy, while more expensive, builds cash value and pays out a death benefit. It remains in effect as long as you pay the premium. Depending on your situation and budget, obtaining this type of policy could be a good way to protect your family’s wealth.
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This article originally appeared on GOBankingRates.com: I’m a Banking Expert: 8 Ways To Use Your Bank’s Products and Services To Build and Protect Wealth
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