What is a relationship rate and how can it benefit your money?

Whether you’re moving to a new bank or looking to beef up your current deposit account, a relationship rate, also known as a relationship annual percentage yield (APY), can help boost your savings potential. 

A relationship APY is a boosted yield you may get with a deposit account if you open another deposit account at the same bank. Usually, banks offer this deal when you open an account geared towards savings — including money market and savings accounts — and a checking account.

Whether or not it’s worth opening various accounts to earn a relationship APY depends on your particular financial situation and other factors including monthly maintenance fees (which can offset your savings). It’s important to shop around to find the best deal for you, as you may be able to find very competitive yields on accounts without a relationship APY. 

Here’s what you need to know about relationship rates.

How a relationship rate can impact your money

A higher APY means your money grows faster over time. 

For example, if you keep $5,000 in a savings account with a 4 percent APY for one year, you’d earn nearly $200 in interest. In contrast, if you kept the same amount in an account with 1 percent APY, you’d earn just $50. Thus, boosting your current yield with a relationship APY can go a long way towards your savings goals. 

Whether a relationship APY is offered, what conditions you need to meet to obtain it and how much it boosts the base yield varies from bank to bank. Some deposit accounts may even come with extra perks with a relationship APY, including increased cashback on debit or credit accounts and interest rate discounts on mortgages and other loans.

KeyBank, for example, offers higher interest rates on its savings accounts, boosted cashback on its credit card and interest rate discounts on mortgage and personal loans.

Major banks that typically offer relationship rates include:

• Wells Fargo
• BMO Bank 
• TD Bank
• U.S. Bank
• PNC Bank

But while obtaining a relationship APY can come with several perks, it may come with several burdens, too. For example, opening a checking account may mean shelling out extra cash on monthly maintenance fees, which may completely offset any earnings depending on how much you have saved. And the relationship APY may not even be enough of a boost to justify opening multiple accounts. 

Take Chase Bank as an example. It offers a relationship rate for its Chase Premier Savings account when you open a Chase Premier Plus Checking or Chase Sapphire Checking account, both of which charge a hefty monthly fee of $25 that isn’t easily waived. But your savings APY will only be boosted by a nominal 0.01 percent APY, for a total of 0.02 percent APY, making this a poor deal for most consumers. 

Bottom line

Relationship APYs can enhance your savings by offering higher interest rates when you open multiple accounts at the same bank. Some institutions may even offer additional perks, including increased cashback and discounts on loans. However, it’s crucial to carefully evaluate the costs involved with earning a relationship APY — including monthly maintenance fees — as the costs may negate the benefits. Your best bet is to shop around to find the best deal for you, ensuring that any potential boost justifies the effort and additional account requirements.