What Is Group Banking?

A woman looks at her phone while holding a bank card.
•••

Westend61 / Getty Images

DEFINITION
Group banking is when a bank offers special discounts and perks to a certain group of people, such as employees of a corporation.

Group banking is when a bank offers special discounts and perks to a certain group of people, such as employees of a corporation.

Here’s a closer look at how group banking works, including what types of perks group banking accounts offer, and the pros and cons of group banking.

Definition and Examples of Group Banking

Group banking is a type of financial service in which banks offer special benefits—such as better interest rates and other perks—to a specific group of people. This group could be employees of the same company or members of the same organization. 

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 your employer offers group banking, you should be able to find out more through your HR department. 

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
    • Perks may not be as good as advertised
    • You may be locked into using a specific bank
    • You may have to pay fees
Disadvantages
    • Perks may not be as good as advertised
    • You may be locked into using a specific bank
    • You may have to pay fees


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.

Even if your employer offers group banking, it’s worth it to shop around to see if you can get better deals at other banks

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.

Key Takeaways

  • Group banking is a type of financial service in which a bank offers special perks to a group of people, such as employees of a certain company or members of an organization.
  • Group banking features vary by institution but may include access to free bank accounts, better interest rates, waived fees, and special services.
  • If your employer offers group banking, you can typically enroll through your HR department.
  • Not all group banking programs are as good as advertised, so compare perks with other banks to see which ones are best for you.

Article Sources

  1. The Citadel. “Group Banking.”

  2. OnPoint Community Credit Union. “Group Banking.”

  3. Montgomery Bank. “Montgomery Group Banking.”