Salem Five Direct just increased the new-account rate on its eOne Savings Account from 1.00% to 1.25% APY. There's no guarantee about how long this will last. The promo rate applies to balances up to $500,000. It used to apply to balances up to $1 million. This new rate and balance cap are listed at the Salem Five Direct eOne Savings page as of 11/07/2012.
As before, this promo rate only applies for new accounts. In the small print, it says "The stated APY applies to new eOne accounts opened after 08/27/2012." If you had opened an eOne Savings account before that, you'll have to check your statement or call the bank. I once again tried to get the rate for existing customers, but the CSR refused to provide any details. I was told that "rates vary as to when an account was opened and which promotion a customer received."
In my opinion it's misleading to only list the promo rate on the public website without listing the ongoing rates that current customers receive. Other banks that offer promo rates also list their standard rates. One example is EverBank.
In June two DA readers who were 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).
Salem Five Direct has been offering various eOne Savings Account promotions for the last two years. In April 2011 it was offering a 1.25% APY guaranteed to June 1, 2011. In February 2012 it was offering a 1.00% APY guaranteed through August. Then in August, another 1.00% promotion was launched but there was no more guarantee about how long the rate would last.
The current 1.25% APY is very 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 continues to offer a CD promotion with two special CD rates that are very competitive: 1.15% APY for 18 months and 1.50% APY for 30 months. Minimum deposit is $10,000. These rates are listed in the Salem Five Direct eCD page as of 11/7/2012. I have more details in my Salem Five Direct CD review.
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 13.07% (above average) based on June 2012 data. Please refer to our financial overview of Salem Five Bank for more details.