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Important points
Relationship Rate (Relationship APY) allows you to earn a higher annual yield on your savings account when you open additional accounts with the same bank.
The terms and benefits associated with relationship APYs vary by bank, including the level of boost and additional benefits.
Some offers have higher fees compared to the increased APY, which may negate the overall benefit of getting a relationship APY.
Whether you’re moving to a new bank or want to enhance your current savings account, the relationship rate, also known as the relationship annual percentage rate (APY), can help increase your savings potential.
Relationship APY is the increase in yield you get on a savings account if you open another one with the same bank. Banks typically offer this deal when you open savings and checking accounts, such as money market accounts and savings accounts.
Whether it’s worth opening different accounts to earn relationship APYs depends on your specific financial situation and other factors, such as monthly maintenance fees (which can offset your savings). You may be able to find very competitive yields on non-APY accounts, so it’s important to shop around to find the best deal for you.
Here’s what you need to know about relationship rates.
Impact of relationship rate on money
A higher APY means your funds will grow faster over time.
For example, if you keep $5,000 in a 4% APY savings account for a year, you’ll earn nearly $200 in interest. In contrast, if you keep the same amount in an account with a 1% APY, you’ll earn just $50 in profit. Therefore, increasing your current yield in relation to APY can make a significant contribution to your savings goals.
It depends on the bank whether a relational APY is offered, what conditions must be met to obtain the APY, and how much the base yield increases. Some savings accounts may also come with additional benefits in relation to the APY, such as increased cash back on debit or credit accounts or interest rate discounts on mortgages and other loans.
For example, KeyBank offers higher interest rates on savings accounts, more cash back on credit cards, and interest rate discounts on mortgages and personal loans.
The major banks that commonly offer relationship rates are:
But while there are some benefits to building a relationship on APY, it can also come with some burdens. For example, opening a checking account could mean paying extra cash in monthly maintenance fees, which could completely offset your return depending on how much you save. And the APY relationship may not be enough of a boost to justify opening multiple accounts.
Consider Chase Bank, for example. When you open a Chase Premier Plus Checking or Chase Sapphire Checking account, you will receive the relevant rate for your Chase Premier Savings account. Both have hefty fees of $25 per month that are not easily waived. However, your savings APY only increases by 0.01% APY nominal and 0.02% APY total, making this a poor deal for most consumers.
conclusion
Relationship APY allows you to increase your savings by offering higher interest rates when you open multiple accounts with the same bank. Some financial institutions may also offer additional benefits, such as increased cash back or loan discounts. However, costs can negate the benefits, so it’s important to carefully evaluate the costs of earning a relationship APY (including monthly maintenance fees). Your best bet is to shop around to find the best deal for you and make sure the potential boost is worth the effort and additional account requirements.
