DA reader, RZ, explained the recent Salem Five Direct eOne Savings rate hike perfectly:
An Old Standby Resumes The Pole Position
Following a 100 bps rate increase, the eOne Savings account now earns 3.50% APY on all balances up to $1 million. Balances over $1 million will be transferred to a Statement Savings Account that currently earns 0.01% APY. As of today, the eOne Savings account offers the highest rate on nationally available savings accounts and Money Market accounts.
|3.50*%||-||$1m||Salem Five Direct||eOne Savings - New Money|
|OTHER TIERS: 0.01% → $1m+|
DA readers who are familiar with the eOne Savings account (and its previous rate increases) may recognize the following statement from the promotion page.
The stated APY applies to new eOne accounts opened as of today's date.
In the past, some DA readers reported that their requests to have the new promotion rate applied to their existing accounts were approved. In a Live Chat, CSR confirmed that the new rate does not automatically apply to existing accounts, but current eOne Savings account holders can contact Salem Five Direct to request the new rate.
DA: Does the new eOne Savings 3.50% APY apply to existing accounts?
Salem Five Direct: Yes
DA: Do I have to call and ask for the new rate or will the rate increase happen automatically?
Salem Five Direct: Yes, you have to call (it needs to be on a recorded line) or send a secured message.
There is a sentence under “What You Will Need to Open Account” that continues to be confusing, unless you read carefully:
eOne Savings eligibility is limited to consumers who apply online and who do not have an existing checking or savings account with Salem Five Bank at the time of the application, except that consumers with an existing eOne Checking Account are eligible for the eOne Savings Account.
The first time I read “existing checking or savings account with Salem Five Bank,” I thought Salem Five Direct, which made no sense, since “consumers with an existing eOne Checking Account are eligible.” If you currently have a Salem Five Bank (not Salem Five Direct) checking or savings account, you are not eligible to open an eOne Savings Account.
- eOne Savings accounts opened as of today will earn 3.50% APY on balances up to $1 million.
- Balances greater than $1 million may be transferred to a Statement Savings Account, which currently earns 0.01% APY.
- New money (funds not previously on deposit with Salem Five or Salem Five Direct) is required for new accounts.
- There is no rate guarantee.
- The minimum opening deposit is now $10 (down from $100).
- This account must be opened online.
- Existing Salem Five Bank (not Salem Five Direct) checking or savings account holders are not eligible, “except that consumers with an existing eOne Checking Account are eligible for the eOne Savings Account.”
- At the time of the application, only one joint account holder and one beneficiary can be added. After the account is approved and opened, additional owners can be added over the phone.
As stated in the eOne Savings Account Disclosure,
This account is designed for customers who bank electronically through ATMs, mobile devices, telephone, and online. If at any time you conduct a transaction at one of the Bank’s branches, the Bank will assess your account a branch transaction fee [$2.00] for the applicable statement period. Additionally, the Bank will assess your account a monthly paper statement fee [$2.95] if you do not elect to receive eStatements within 30 days of account opening or if at any time you discontinue receiving eStatements.
You must register for online banking at salemfive.com. Once registered, you must enroll in eStatements whereby you agree to receive your monthly periodic statements electronically. Once you enroll, paper copies of your statements will not be mailed to you and you will not receive your original cancelled checks. Images of your paid checks, however, will be provided with your eStatements and are available to you within Salem Five Online Banking.
According to CSR, the fees and limits on ACH transfers initiated from Salem Five Direct are as follows:
- External transfers out of the account will incur a $3.00 charge; external transfers into the account are free.
- Outgoing external transfers are limited to $5k per transaction, $5k in aggregate per day, and $20k in aggregate per calendar month. If a transfer total exceeds $5k, more than one transfer will be required, as a result of the $5k per transaction limit.
- Once an external transfer from Salem Five Direct is initiated, it could take up to three days for the other institution to receive the funds.
These fees and small limits have been in effect for about seven years. I had hoped Salem Five Direct would have changed the fees and limits for the better. If you decide to open an eOne Savings account, it would be wise to initiate ACH transfers from another financial institution. For those types of transfers, Salem Five Direct has no dollar limits and no Salem Five Direct fees would apply.
Depositors Insurance Fund, Or The Lack Thereof
Until fairly recently, Salem Five Direct deposits were insured by both the FDIC and Depositors Insurance Fund (DIF). In late July, Salem Five Direct account holders were notified that the Bank would be phasing out DIF coverage by the end of September. While any new accounts opened after September 30, 2022 would no longer be insured by DIF, accounts opened prior to September 30, 2022 will be DIF insured through September 30, 2023.
Not exactly sure what DIF coverage entails? The following is from the DIF website.
All DIF member banks are also members of the FDIC. Each depositor is insured by the FDIC to at least $250,000. All deposits above the FDIC insurance amount are insured by the De-positors Insurance Fund (DIF).
The combination of FDIC and DIF insurance provides customers of our member banks with full deposit insurance on all their deposit accounts. No depositor has ever lost a penny in a bank insured by both the FDIC and the DIF.
I wasn’t able to get any specifics from CSR as to why the DIF coverage was dropped, just a somewhat ambiguous statement that the Salem Five Bank deposit level had grown too large to be insured by DIF. I recall hearing about other Massachusetts chartered banks that became too big and were forced to leave DIF. When Cambridge Savings Bank introduced its online division, Ivy Bank, about 15 months ago, Ivy Bank’s website made no mention of DIF, even though Cambridge Savings Bank had DIF coverage. The following quote from an Ivy Bank CSR shed some light as to what was happening.
… as the bank grows DIF insurance is not guaranteed. Since Cambridge Savings Bank and Ivy Bank are not separate entities for insurance purposes, and Cambridge Savings Bank is growing to a point of no longer having DIF insurance …
Bottom line – DIF insurance can disappear if your bank grows too big. There actually is a deposit ceiling that forces a bank to no longer be insured by DIF.
More than 15 years ago, Salem Five Direct opened its virtual doors. As an online division of Massachusetts-based Salem Five, Salem Five Direct offers its product line on a nationwide basis to all U.S. citizens and permanent resident aliens with valid Social Security numbers.
As an internet bank, Salem Five Direct has no brick-and-mortar branches. Opening any type of account, including an eOne Savings account, must be done online.
As an online division of Salem Five, Salem Five Direct operates under Salem Five’s FDIC Certificate and shares its financial history.
Salem Five Direct/Salem Five has an overall health grade of "A+" at DepositAccounts.com, with a Texas Ratio of 2.56% (excellent) based on June 30, 2022 data. In the past year, the Bank has increased its total non-brokered deposits by $384.86 million, an excellent annual growth rate of 8.8%. Please refer to our financial overview of Salem Five Direct/Salem Five (FDIC Certificate # 23296) for more details.
Established in 1855, Salem Five Cents Savings Bank was known as the "Nickel Bank," because the first day’s deposits ranged from five cents and up. Headquartered in Salem, Massachusetts, the Bank has always considered itself innovative, and in 2015 added the Cardless Cash ATM, which allows customers to “open the bank’s mobile app on their smartphone, put in the amount they want withdrawn, then visit an ATM, scan a QR code, and pick up their money.”
Between 2013-2018, Salem Five Bancorp (parent company of Salem Five) completed the acquisitions of three Massachusetts banks: Stoneham Savings Bank (2013), Georgetown Bank (2017), and Sage Bank (2018). Salem Five is currently the sixth largest bank in Massachusetts, with assets in excess of $6.2 billion and nearly 170,000 customer accounts.
How the eOne Savings Compares
When compared to nationally available Money Market Accounts and Savings Accounts tracked by DepositAccounts.com, that do not require large balances or direct deposit and do not have small balance caps, the Salem Five Direct eOne Savings APY shares the top spot with the DollarSavings Direct Dollar Savings Account APY and the Upgrade Premier Savings APY.
The above information and rates are accurate as of 10/28/2022.