Review of the New Sallie Mae Internet Bank and Its Link to Upromise Rewards
Update 2/1/2011: The savings account rate has fallen to 1.25% APY
Sallie Mae, a company known for its student loan business, has started an internet bank which offers a savings account and CDs. By the look of the rates and features, it appears to be a solid online bank. The rates are competitive, but nothing to get excited about. The savings account rate is 1.35% APY as of 3/02/2010. This isn't great, but it is competitive compared to many other online banks. The one unique feature is the link with the Upromise rewards program. I'll describe more about this later in the post.
Sallie Mae Savings Account Review
The savings account and CDs are offered through Sallie Mae Bank which has been a FDIC member since 2005 (FDIC Certificate # 58177). The online bank website has a decent FAQ section. However, it didn't mention a few things, so I called the bank at its toll-free number (877-346-2756, M-F 8am-8pm ET). I was able to quickly connect to a customer service rep who was friendly and knowledgeable. Some of the important savings account features based on the bank's FAQs and based on my conversation with the bank CSR include:
- 1.40% APY as of 9/02/2010
- No minimum balance or monthly fees
- Entirely online account application process (CSR)
- Beneficiaries (up to 4) can be added (CSR as of 9/02/10)
- No hard credit inquiry (CSR)
- ACH bank-to-bank transfer service (FAQ)
- Micro-deposit method (trial deposit) are used to link external accounts (FAQ)
- No limit on the ACH transfer size (CSR)
- Limit on the number of external links is
sixthree (CSR as of 8/31/12)
- Typical savings account limitation of 6 withdrawals per month
- Hold on deposits after the initial deposit: 5 business days for $5K and under, 10 business days for over $5K (FAQ)
- ACH withdrawals take 2 to 3 business days (FAQ)
- Interest is compounded daily and credited to your account monthly (FAQ)
Sallie Mae Internet CD Review
The internet CDs are a little less competitive than the savings account. Three terms are currently offered. The rates as of 9/02/2010 include:
- 1.55% APY 12-month CD
- 2.30% APY 36-month CD
- 3.00% APY 60-month CD
Like the savings account, there is no minimum initial deposit. Some important features mentioned in the disclosure include:
- Interest rate is fixed and is established when your CD is opened
- Interest earned on your CD will be credited to your Account on a monthly basis
- Early withdrawal penalty is 3 months of interest for the 12-month CD and 6 months of interest for the longer terms
- Grace period at maturity is 10 calendar days
Sallie Mae Bank Financial Overview
Sallie Mae Bank is sizable with $4.7 billion in assets and $3.6 billion in deposits. Its ratings for safety and soundness are above average: 4 stars (sound) at Bankrate.com and 3 stars (adequate) at BauerFinancial. Both ratings are based on 9/30/09 financial data. Note, this is one of the rare times that Bankrate has a higher star rating than BauerFinancial.
Link with Upromise Rewards Program
As I mentioned above, the one unique thing about the Sallie Mae savings account is its link with the Upromise program. I haven't used this program, but it appears that you can make some extra cash back on your purchases on top of what you get from your credit or debit cards. You can earn cash back in the following ways:
- Shop Upromise partners through upromise.com (1% to 25% back)
- Sign up as a preferred diner. Register your credit or debit card. Visit eligible restaurants (up to 8% back)
- Register your grocery store cards at Upromise. Buy participating products and make sure your grocery store card is scanned at checkout (1% to 3% back).
In the past you only had three options to redeem the earnings: 1) invest them in a 529 college savings plan, 2) use them to pay down student loans, 3) receive a check. You can now have the earnings transferred automatically into your linked Sallie Mae Savings Account when the Upromise balance reaches $10.
Another benefit of transfering your Upromise earnings to the Sallie Mae savings account is that Upromise can provide a 10% annual match on your Upromise earnings. The 10% match requires you to link your Upromise Account with your Savings Account, and within 90 days of opening your Savings Account, you must either 1) set up an automatic savings plan with a monthly deposit of $25 or more, or 2) fund the account with $5,000 or more. One important note about this 10% match, Upromise can change it at any time. Also, Upromise Accounts are not FDIC insured. However, the Savings Account is FDIC insured.
Do you have a Upromise Account? How easy has it been to earn cash back?
- 02/01/11: 1.25% APY
- 11/05/10: 1.30% APY
- 05/01/10: 1.40% APY
- 03/09/10: 1.25% APY
- 03/02/10: 1.35% APY
Two weeks for ACH is a turn off for me. I can walk faster and deliver the money in person.
As for the upromise rewards they aren't very much if you don't have the Upromise Credit Card, however they do add up over time. And if you use their webisite to make purchases instead of a direct discount at the merchant you'll get a deposit into your Upromise account. You link upto 10 credit cards as well as your Grocery membership cards. You get some money back when you use your cards at participating retailers.