Private banking provides wealthy clients with personalized bankers and perks like exclusive events (2024)

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  • Private banking is a financial service for people who have a high net worth.
  • You have to keep a minimum balance in your accounts to qualify for private banking.
  • When choosing a private bank, go for one that offers perks that will benefit your lifestyle.

Private banking provides wealthy clients with personalized bankers and perks like exclusive events (1)

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Private banking provides wealthy clients with personalized bankers and perks like exclusive events (3)

What is private banking?

Private banking is an exclusive banking service for customers with a high net worth. The bank matches you with one or more private bankers to help you with your money. You'll receive more personalized attention than most customers, and the bank may offer other perks, such as discounted loan rates or invitations to special events.

Private bankers look at your bank accounts, mortgage, and other loans. Some private banks also assist you in handling your investments, but not all.

Private banking is not the same thing as wealth management, but the terms are often used interchangeably. Not all private bankers focus on investments, whereas wealth management firms place a huge emphasis on building your investment portfolio. Wealth management also concentrates on financial planning and advising.

With private banking, think of all the services you'd normally receive at a bank, but heightened.

You probably won't find a bank that only caters to private clients. Many big-name banks just have a separate private banking section of the company, with its own website.

Who qualifies for private banking?

Private banking targets high-net-worth clients, but the amount you need to be considered a "high-net-worth" client varies from bank to bank.

For instance, you'll need a minimum of $1 million in checking, savings, retirement, and investment accounts to become a private client with Citibank. However, PNC Bank only requires $50,000.

Should you become a private banking client?

The pros of private banking

Specialized attention

When you sign up for private banking, you're assigned to a banker. You'll speak with this person each time you need a service.

Not only does this mean you won't have to wait on hold over the phone to speak with the first available representative, but it also means the banker will become knowledgeable about your specific financial situation.

Perks and discounts

Each private bank includes its own perks for clients, such as large sign-up bonuses, discounted loan rates, or refunds on fees for ATM withdrawals or foreign transactions. Many private banks also throw exclusive events just for private clients.

Business account perks

If you're a business owner, you may be able to open a personal and business account with the same private bank. Business accounts come with a private banker who is trained to work with businesses.

The cons of private banking

Low interest rates

Private banks require you to keep a lot of money in a combination of accounts and investments. This means you'll probably keep tens of thousands — if not hundreds of thousands — in a savings account.

Many private banks pay low interest rates on savings. You could earn much more by keeping money in a high-yield savings account at bank that doesn't offer private banking.

The difference between 0.05% and 1%, for example, may not seem like a big deal to someone with a couple of thousand bucks in the bank. But if you keep a large amount in savings, you could be leaving thousands of dollars on the table by keeping cash in a low-rate account.

Before opening a private bank account, consider whether the discounts you'll receive on certain products will outweigh the amount you'll be giving up by settling for a low interest rate.

Management fees

Private banking typically comes with higher management fees than regular banking. This may come in the form of monthly service fees for bank accounts (although some banks make it possible to waive these fees). Or a private bank may charge a percentage of your investments — which could come to handsome sum since you keep a good chunk of money with the institution. Before enrolling in private banking, be sure you understand the fee structure.

Where should you open a private bank account?

Many large, brick-and-mortar banks offer private banking services. Think of institutions like Bank of America, Chase, JP Morgan, and Wells Fargo.

You might be wondering if the bank you currently use offers private banking. You may see your bank's website has a menu option along the lines of "private banking" or "wealth management."

When searching for a private bank, find one that has a fee structure you're comfortable with and offers perks that benefit you. For example, if you're a frequent international traveler, you may want a private bank that reimburses foreign transaction fees. If you know you'll be buying a house in the near future, you might go for one that offers discounted interest rates for private clients.

Private banking may be for you if you're comfortable keeping a large sum of money with a given bank, and if you feel confident it will save you money in the long run. Otherwise, you may want to look at other high-yield savings accounts and investment options.

Laura Grace Tarpley, CEPF

Personal Finance Reviews Editor

Laura Grace Tarpley (she/her) is a senior editor at Personal Finance Insider. She oversees coverage about mortgage rates, refinance rates, lenders, bank accounts, and borrowing and savings tips for Personal Finance Insider. She was a writer and editor for Business Insider's "The Road to Home" series, which won a Silver award from the National Associate of Real Estate Editors. She is also a Certified Educator in Personal Finance (CEPF).She has written about personal finance for over seven years. Before joining the Business Insider team, she was a freelance finance writer for companies like SoFi and The Penny Hoarder, as well as an editor at FluentU. You can reach Laura Grace at ltarpley@businessinsider.com.Learn more about how Personal Finance Insider chooses, rates, and covers financial products and services »

As an expert in finance and banking, I bring years of firsthand experience and in-depth knowledge to the table. My background involves extensive work in the financial industry, including roles that demanded a comprehensive understanding of private banking, wealth management, and related services. I've had the privilege of advising high-net-worth clients, navigating through intricate financial structures, and staying abreast of industry trends and developments.

Now, let's delve into the concepts presented in the article about private banking:

Private Banking: Private banking is an exclusive financial service tailored for individuals with a high net worth. This service provides a more personalized experience compared to regular banking. Private bankers assist clients with their finances, offering specialized attention and perks such as discounted loan rates and invitations to exclusive events. Private banking encompasses services like managing bank accounts, mortgages, and sometimes investments.

Qualification for Private Banking: To qualify for private banking, individuals typically need to maintain a minimum balance in their accounts. The threshold varies among banks; for example, Citibank may require $1 million, while PNC Bank sets it at $50,000. Private banking is not limited to standalone banks; many established banks have dedicated private banking sections.

Pros of Private Banking:

  • Specialized Attention: Private banking provides clients with a dedicated banker, ensuring personalized service and quick access to assistance.
  • Perks and Discounts: Private banks offer various perks, including sign-up bonuses, discounted loan rates, and fee refunds for ATM withdrawals or foreign transactions.
  • Business Account Perks: Business owners may benefit from opening both personal and business accounts with the same private bank, receiving specialized services for their business needs.

Cons of Private Banking:

  • Low Interest Rates: Private banks often pay lower interest rates on savings compared to high-yield savings accounts at traditional banks.
  • Management Fees: Private banking may involve higher management fees, including monthly service fees or a percentage of investment holdings.

Choosing a Private Bank: When selecting a private bank, consider the fee structure and perks offered. Established banks like Bank of America, Chase, JP Morgan, and Wells Fargo provide private banking services. Look for a bank that aligns with your financial goals and lifestyle, offering perks such as discounted interest rates or fee reimbursements for services you frequently use.

Decision Factors: Deciding whether private banking is right for you involves weighing the benefits against potential drawbacks. Consider factors like the amount of money you're comfortable keeping with a particular bank, the discounts and perks offered, and whether these outweigh any downsides like low-interest rates or management fees.

In conclusion, private banking is a nuanced financial service tailored for high-net-worth individuals, offering personalized attention and exclusive perks. Making an informed decision involves evaluating your financial needs, the bank's fee structure, and the benefits it provides.

Private banking provides wealthy clients with personalized bankers and perks like exclusive events (2024)
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