For example, The Citadel (a military college in South Carolina) offers its employees group banking through Wells Fargo. When an employee enrolls in the program, they get access to two perks: loan benefits and no monthly service fees on checking accounts with direct deposit.
How Does Group Banking Work?
Group banking is a type of workplace perk—similar to 401(k) company matches and paid time off. The idea behind group banking is simple: Employers want to attract and retain the best talent. So, they may partner with a financial institution to give their employees access to deals and discounts they wouldn’t otherwise get. Group banking features vary by institution, but generally, members can expect to enjoy some of these benefits:
Low or no-fee checking and savings accounts Better interest rates on bank accounts and loans Access to special products and services One-on-one guidance from banking specialists Other perks to help them improve their financial health
For example, OnPoint Community Credit Union has group banking services. If your employer enrolls, you can enjoy interest-free checking, up to $800 off closing costs on your first mortgage, and up to 0.25% off a standard consumer loan’s APR. Montgomery Bank is another financial institution with group banking. Employee perks include an additional 0.5% annual percentage yield on CDs (above the advertised rate), discounts on safety deposit boxes, and a free financial checkup by a certified financial planner. If you stop working for the employer providing your group banking account, then it’s likely up to your employer to notify the bank that you’re no longer employed with them. In turn, the bank may remove the employer-related perks or transition you to a non-group account. If you have a group checking account, the bank may let you keep the same account number but end your group benefits.
Advantages and Disadvantages of Group Banking
Advantages Explained
Employees gain access to exclusive banking perks: Group banking helps employees gain access to special products and services that can help them improve their financial lives. These perks might include discounts on loans, waived bank fees, and access to financial specialists. Employers look more attractive to job candidates: Because group banking is a workplace perk, it can help employers attract and retain key employees. Banks gain access to new groups of potential customers: Group banking also allows banks to deepen their relationship with employers and gain access to new groups of potential customers. For example, you may have never heard of ABC Bank. But if your employer says you can get a discount on a home loan by enrolling in their group banking program, you may happily choose them over another institution.
Disadvantages Explained
Perks may not be as good as advertised. If your employer offers group banking with an institution that has historically bad rates and high fees, you may not get a good deal, even if they are discounting these services. You may be locked into using a specific bank. If you enroll in a group banking program, you may feel pressured to use that bank for all your financial needs—even if they don’t offer the best products or services. This could end up costing you more in the long run. You may have to pay fees. Even if your employer’s group banking program has no monthly service fees, you may still have to pay other bank fees, such as non-network ATM fees, foreign transaction fees, and overdraft fees. Always read the fine print to see what you could be on the hook for before you open an account.
