Salem Five Direct has a new promotion for its eOne Savings account. It's offering new eOne Savings account customers a 1.00% APY on balances up to $1 million. The rate had been 0.75%. Unlike past promotions, it's not guaranteed to last for any amount of time. The rate could change at anytime. This promotional rate is listed at the bank's eOne Savings page as of 8/29/2012.
One thing that's misleading in my opinion is that this 1.00% APY does not apply to existing customers. I tried to get the existing savings account rate using Salem Five's online chat service, but the CSR would not disclose this to me. I was only told that the 1.00% APY was a promotional rate, and that it did not apply to existing customers. If you're an existing customer, please leave a comment about your current rate. Hopefully, it's at least 0.75%.
Since this 1.00% APY is the only rate listed at Salem Five Direct, I would have assumed this applied to all customers. Fortunately, two DA readers who are eOne savings account customers described how they were mislead in this forum thread. Their savings account rate was cut to 0.75% long before this rate cut was shown on Salem Five Direct. One reader said that he was only able to tell that the rate cut occurred when he reviewed his statement and noticed the rate was cut at the start of the statement cycle (over a month ago).
The 1.00% APY is competitive, but not knowing how long this will last and not having an easy way to tell when it changes are major downsides.
Salem Five Direct savings account also has other downsides. There are fees and small limits on its ACH bank-to-bank transfer system. Below is an excerpt of the CSR chat describing this:
There is a fee for outgoing transfers only if you initiate it from Salem Five. External Transfers outgoing from your account are limited to $2,000 per transaction, $2,000 in aggregate per day and $20,000 in aggregate per calendar month. Please be aware that there is a $3.00 fee for each outgoing transfer; there is no charge for incoming transfers. If you initiate it form another bank there is no fee and there is no limit to withdraw.
Salem Five Direct is also offering a CD promotion with two special CD rates that are fairly competitive: 1.10% APY for 18 months and 1.25% APY for 30 months. These rates are listed in the Salem Five Direct eCD page as of 8/29/2012.
Minimum deposit of the eCD is $10,000. These specials are only available for funds not currently on deposit at Salem Five. I asked the CSR for some more details of these eCDs. Below are excerpts of the replies that I received:
Here is what I was told for opening and closing the eCD:
The eCD and eOne Savings account would need to funded online from another bank. You would include the routing number and account number on the application. We send a maturity notice for CD's 40 days prior to the maturity date. You may send a request in writing to close the CD, or if you have online banking with Salem Five you may send the message securely through the Contact Us link.
We can either mail a check or you may complete a wire form and mail it with the letter to close the account. Outgoing domestic wire transfers are 20.00.
And here is what I was told on the early withdrawal penalties:
The penalty would be 4% of the principal balance for both terms.
The penalty would be 1% of the principal balance if it is a jumbo CD, for 100,000.00 or more.
The 4% of principal is a large penalty when the highest interest rate is only 1.25%. That's over 3 years of interest!
It's interesting that the Jumbo CD EWP is so much smaller. If you can confirm this, please leave a comment.
I first reported on Salem Five Direct back in 2007 when it was offering the eOne checking account with a 5.30% APY. The eOne Savings account was launched in 2009.
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 13.43% (above average) based on March 2012 data. Please refer to our financial overview of Salem Five Bank for more details.