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Salem Five Direct's New Savings Account & CD Promotions

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Salem Five Direct

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.

CD Promotion

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.

Bank Overview

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.


  Tags: Salem Five Direct, savings account, checking account

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Comments
12 Comments.
Comment #1 by Anonymous posted on
Anonymous
Salem Five refused to tell me the current interest rate on its savings account after the initial guaranteed 1% promotion ended for me in early August.  I was advised that the rate I would get is the rate at the end of the next statement cycle.  I think this is probably illegal (FDIC complaint time?).  Plus, you are right, the current promotion is misleading since there is no information on the current rate for existing customers.

 

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Comment #2 by Anonymous posted on
Anonymous
I've also had problems in the past of getting an APY, which is violation of the truth in savings act. 12 U.S.C. 4303(a) requires that they maintain a table of interest rates that includes: (1) Any annual percentage yield. (2) The period during which any such annual percentage yield will be in effect. Salem5 seems to like to give themselves the flexibiky to decide the APY for the whole month at the end of the statement period.

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Comment #3 by Anonymous posted on
Anonymous
My Chat

 

Gary: Hi, What is the current rate for existing customers of the esavings account?

Daniel: The current rate depends on when the account was opened.

Gary: NJ

Daniel: I am unable to disclose any personal account information on our Chat Service. You may contact our Customer Service Team at 1-800-850-5000, or email us through your Online Banking System.

Gary: This is not personal, this is what you pay for all customers

Daniel: We have 2 different rates for our eOne Savings Accounts.

Gary: Ok, what are the two rates?

Daniel: The 2 rates are either .75% or 1.00%.

Gary: Thank you

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Comment #4 by Anonymous posted on
Anonymous
I talked to a CSR at (800) 850-5000 or if you are local at (978) 745-5555 and she gave me run around of the exact penalty on the jumbo CD. First she said 1% from the principle plus all of the interest for of the last 12 months, then she said if you close before a year is over it will be 1% plus all of the interest plus the shortage of the interest if held less then 12 months, then she added to call the management to make sure that her understanding is correct.
I tried calling to speak to a manager, but I was left on hold for 42 minutes then the line drooped off hook. I tried calling the same line but would not get through this time, so I gave up.

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Comment #5 by Anonymous posted on
Anonymous
I’m #4, finally got to the manager, but he instructed me to read this paragraph from their web site:

“Early Withdrawal Penalty:  When you open a Term Deposit Account, you agree to keep your funds on deposit until the maturity date.  You may make withdrawals of principal from your account before maturity only if we agree at the time you request the withdrawal.  If you withdraw principal before the maturity date, a penalty equal to 4% of the principal balance withdrawn will be charged to your account.

If the amount of the penalty exceeds the amount of earned interest that has not already been paid to you, we may have to deduct some of the penalty from your principal. “

and he said to contact my attorney or advisor if  I had a large sum to deposit, then he hang up.

I guess the penalty for early withdrawal is 4% for all CDs, regardless of the balance or length of the term.

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Comment #6 by Anonymous posted on
Anonymous
I opened a number of 2-year online CDs at Salem Five in early 2010, when the bank was doing a "special" promotion through its main website.  There were some technical glitches opening the CDs, and I got first-rate customer service in resolving them.  I also successfully opened a 2-year IRA CD there.

At that time, Salem Five Direct only handled online checking and savings accounts, not online CDs.

Maybe the bank has switched the online CD business exclusively to the Salem Five Direct division, employing different CSRs and supervisors who are neither as knowledgeable or helpful.  I guess I'll find out when my 2-year CDs mature next year.

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Comment #7 by Anonymous posted on
Anonymous
Correction to my post as Anonymous #6--change "2010" to "2011."

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Comment #8 by Anonymous posted on
Anonymous
I'm pulling all my money out of Salem Five after speaking to a CSR who told me that the 1% is only for new customers.  So...since this bank is "eating it's young" (meaning folks like me, who have more than one account, and are loyal customers), I'm not playing....bye bye.

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Comment #9 by Kaight posted on
Kaight
Sadly, operations like Salem Five won't stop pulling these shenanigans until deposits commence drying up. 

                        It cannot happen too soon!!

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Comment #10 by sjh13 posted on
sjh13
I've just closed my Salem Five esavings account because I don't want to deal with a Bank that is so disrespectful of existing customers.  I had a LOT of money in their bank for well over a year, and now they refuse to give me the 1% they are offering to "new money"  Do they think folks will just accept .75% when there are now several good options around at 1%?  I vote with my feet, and I urge all existing SalemFive customers to do the same.  It's a bad strategy on the part of Salemfive, because they may gain new money, but they'll lose the old money.  Or maybe that's their goal?  I'm happy to accomodate that goal, and I've moved my money away from Salem, and I've let them know why I'm closing those accounts.

1
Comment #11 by kalo (anonymous) posted on
kalo
Take the 1% rate of your Savings Account Rates page! It is misleading when it is ONLY for new accounts.  If some of the rates are for new accounts and some for existing accounts, put some type of asterix to denote this!  This has just wasted my time and effort and $$$ transfering additional money to Salem Five.  Good grief.

1
Comment #12 by Anonymous posted on
Anonymous
So #11 you want to be spoonfed?    The info is from 8/29, and you expect it to still be the same? Don't make Ken the bad guy here.  Grow up and be responsible for your own money and call the bank to make sure the rates are current before doing anything. And while you are it how about also thanking Ken for providing you the info instead of whining?

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