At the beginning of March, the banking arm of Sallie Mae, a publicly-traded corporation whose main business is student loans, began offering high-yield savings accounts. As I’ve mentioned before, “high-yield” is currently a joke; just a few years ago, you could deposit cash in high-yield savings accounts and count on slightly beating inflation.
It is likely your money in a savings account will lose purchasing power until rates increase again. Even then, with the proliferation of online savings accounts, the marketplace might look much different than the last time rates here high.
I’m not normally a fan of chasing high interest rates; the time and effort generally don’t outweigh minor gains in after-tax income. I suggest finding a bank that offers consistently high interest rates and sticking with them until you have a problem with the bank or could earn at least a hundred dollars more by moving your money.
Banking Deal: Earn 1.00% APY on an FDIC-insured savings account at Ally Bank.
Because I review banking products, I have many active savings accounts. With Sallie Mae, I am adding one more. Like Discover Bank, opening my account at Sallie Mae Bank was very easy.
Opening a Sallie Mae Bank Savings Account
The first page of the account application announces the process will take ten minutes, and I found this to be an accurate estimation.
In order to proceed with the application, you will need your Social Security number, personal identification such as a driver’s license, and the banking information for your linked bank account. I grabbed the routing number and account number for my Electric Checking account at ING Direct and my New Jersey driver’s license, and I was ready to go.
Sallie Mae integrates the online access set-up with the application process. This is a much more efficient way of handing account set-up than the processes used by many other banks. You can see below I was able to create an online account and a PIN for use when calling customer service.
After confirming the information entered is correct, Salle Mae verifies identity by asking the familiar questions derived from data points on the customer’s credit report. Once Sallie Mae completes the identity verification, the bank offers an option for entering a routing number and account number for an external linked bank account from which the initial deposit will be withdrawn.
Sallie Mae requires no minimum balance, so I started with an initial deposit of only $100. Given the bank’s higher rates, I may move more funds from ING Direct to Sallie Mae in the future.
After completing the above process, I was able to view my new Sallie Mae bank account with a zero balance. One enticing feature about Sallie Mae’s high-yield savings account is the ability to link the account to a Upromise account. I’ve been using Upromise for many years, but I no longer use a Upromise credit card. Even without the branded credit card, I earn a few dollars a year.
With a Sallie Mae bank account, I will be able to withdraw any balance over $10 from Upromise. Until recently, the only way to withdraw money from Upromise was to invest it directly into an education investment account, use it to pay off certain student loans, or to request a check for balances over $200.
I was disappointed to see that the only format options for downloading transactions are “Money,” a software no longer in production, and “Excel.” There is no support, either through Direct Connect or Web Connect, for Quicken. In the Quicken desktop software, Sallie Mae is not listed as a supported bank for downloads. Additionally, neither Mint nor Yodlee currently support Sallie Mae. This bank account is a new offering, so this situation might change within a few months.
Once the external funding account is verified, through the typical micro-deposit technique, you will be able to transfer funds at will as well as establishing an automatic recurring transfer.
Sallie Mae’s high-yield savings account may be too new to make a final judgment. The account opening process was the smoothest I’ve ever experienced, even quicker than Discover Bank’s process. I did not need to refer to an email or a welcome package in order to access my account online. The Upromise integration is exciting. This account is a must for anyone with a Upromise account who does not have any education-related savings or investing needs.
What do you think of Sallie Mae Bank’s high-yield savings account?
|Sallie Mae Bank|
|Routing (ABA) number||124385119|
|Established||November 28, 2005|
|Savings interest rates||1.25% APY as of March 9, 2010|
|Location||5217 South State Street, Suite 201, Murray, Utah|
|Direct Connect||Not supported|
|Web Connect||Not supported|