Salem Five Direct has just started a very nice savings account promotion. They're guaranteeing 1.25% APY on balances up to $1M until April, 1, 2012 on its eOne Savings Account. The offer is scheduled to expire on June 1, 2011. They set up a limited time offer page on its website with the details. The eOne Savings Account rate had been 1.00% APY before this promotion. It has no monthly fees or minimum balance requirement.
The 1.25% APY may not sound like much, but in today's interest rate environment, it's a good deal. Many of the past rate leaders like Discover Bank, Capital One and Incredible Bank have cut their rates below 1.25%. There are currently two banks that are offering rates around 1.50% (The Morrill and Janes Bank and Tennessee Commerce Bank), but there's no guarantee how long these rates will last. EverBank is offering 1.51% for 3 months on its money market and checking, but the total amount that qualifies is capped at $150K. Salem Five Direct's rate guarantee of almost 12 months is very rare these days.
Savings Account Details
I just called Salem Five Direct for some additional details that weren't clear on the website. According to the CSR, you don't have to open the checking to qualify for the savings account promo. If you already have the checking, you should be able to qualify if you fund the savings account with new money. I was told that a hard credit pull is done via Equifax. They also use ChexSystems. You can use an ACH transfer for the initial funding with no limit on the amount. They use trial deposits to verify your external account. They will then mail you a signature card. I was told there will be a hold on your initial deposit until they receive the signature card.
One issue with Salem Five Direct is their poor ACH system. This was added in 2009, but it's not much better than not having one. Here's a quick summary of the service:
- $3 fee for outgoing transfers, no fee for incoming transfers
- $2,000 limit per transaction
- $10,000 limit per day
They don't have any limitations on the ACH transfers initiated from another bank. So that would definitely be the best way to make deposits or withdrawals after it's opened.
Checking Account Details and History
I first reported on Salem Five Direct back in 2007. At that time they were only offering an internet checking account, the eOne checking. The checking account used to have a standard top rate of 5.30% APY back in 2007. This rate went down by so much that I stopped following it. In 2009, they then launched the savings account eOne Savings. The rate started out competitive, but that too fell to a level in which it wasn't competitive.
The eOne Checking was popular not only for its high rate, but it also had several nice features and these features have remained. These include:
- No minimum balance
- Free ATMs worldwide - no charge for using other banks' ATMs and refunds of up to $15 per month that other banks charge
- Free online bill payment
- First order of checks free
Salem Five Direct is an online division of Salem Five Cents Savings Bank, which is based in Massachusetts. As a Massachusetts bank, it's a member of the Massachusetts Depositors Insurance Fund (DIF) which covers deposits that exceed the FDIC limits. One thing to note about DIF is that it's a private insurance fund. So there's no government guarantee. You can read the details at the DIF website.
Deposits up to the FDIC limits are guaranteed just like they are at every other FDIC member bank. Salem Five has been a FDIC member since 1981 (FDIC Certificate # 23296).
Salem Five has an overall health score at DepositAccounts.com of 4 stars (out of 5) with a Texas Ratio of 12.85% (average) based on December 2010 data. Please refer to our financial overview of Salem Five Bank for more details.