Part 1 – Get Better Loan Terms: Deposits

Henry Holt
Aug 15
2 min read

Updated: Aug 20

Banks will give their BEST customers better deals than everyone else.

So how do YOU become one of their best customers?

📢 PART 1: DEPOSITS

🔎 Why?

The more deposits you bring to your bank, the more PROFITABLE you are as a customer.

The cheapest source of funding for banks is non-interest bearing (or low interest bearing) Deposits. Banks take these deposits and lend them out to commercial borrowers at 6-8% interest.

Put another way: banks borrow money from you at 0% and earn 6-8% (before operating and other expenses).

You can be a good depository customer if you have a:

Checking accounts (non-interest bearing)
Savings account (Low interest)
CD (Medium-interest)
Money Market (High-interest)

The less interest they pay you, the more profitable your deposits are to them.

💡 But will this always get you a better deal on your next loan?

Generally, yes. But it depends.

If your bank is HUNGRY for deposits: YES.
If your bank is FLUSH with deposits and is having a hard time deploying all its capital into loans: maybe yes, maybe no.

However, in 2025, at a time when banks are generally hungry for deposits, the answer is: most likely yes.

⚠️ Caution When Negotiating

The best approach in business is to create win-wins. You need to win, your bank needs to win. Everyone needs to win.

As soon as someone starts to lose, the relationship can go sour.

You lose if: your bank is charging you too high an interest rate on your loan. You aren't going to be happy when you find out you could have gotten 1.00% better on your deal.

The bank loses if:

You beat them up too much on the loan terms and their margins are razor thin. You become a lot less valuable of a client to them.
And when you aren't that valuable and times get tough or you need a special request, they might start to wonder why they are doing all this work and not making any money.

💰 Know Your Value

All that said, if you know that you are going to bring a lot of deposits to your next lending relationship, tell your banker.

They should give you a better deal on your next loan request.

▶️ Upcoming

This is Part 1 of a series where I'll be going over:

"How do YOU become one of your bank's best customers?"

This will help you know your value, which should:

1. Get you better loan terms

2. Exceptions that other customers at the bank don't get.