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Sallie Mae Bank Review

Sallie Mae [3], normally known for their federal and private student loans, is entering the savings account area with a high yield savings account currently offering 1.35% APY with no monthly fees and no minimums. It’s your standard online bank offering with a pretty standard savings account rates [4]. In scanning their list of offerings, the only thing that stands out is their 10% bonus for Upromise earnings, which can be substantial if you’re a big user of Upromise.

Why Sallie Mae?

I’ve been racking my brain to come up with an explanation of why Sallie Mae has started to offer banking services and I was at a loss until I remembered one key insight – most consumers, until recently, were completely unaware of high yield online banks. It wasn’t until Ally Bank made front page news that online banks started to get respect and awareness for your average consumer.

It’s easy for “us,” readers and producers of personal finance blogs, for us to forget that because we get a daily dose of it. If you mentioned “reward checking accounts [5]” to some of your friends, I bet you’d see some puzzled looks. Ultimately, I think Sallie Mae is leveraging their connection with students and parents to bring even greater awareness to the consumer.

Upromise 10% Bonus

If you use Upromise [6], you can get a 10% annual match on your earnings if you satisfy these conditions:

You must link your High-Yield Savings Account to your Upromise Account and, within 90 days of opening your High-Yield Savings Account, 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. Upromise will match 10% of your Upromise earnings posted as ”funded” to your Upromise Account during the calendar year of January 1 through December 31. Your 10% annual match will be deposited into your High-Yield Savings Account in February of the following year provided that both accounts remain active and are in good standing at the time of transfer.

The Upromise bonus, a partnership that makes sense, is the differentiator for this account. If you earn a lot from Upromise, this normally dull 1.35% APY might be much much higher once you factor in the 10% bonus. If you don’t, then this account doesn’t really offer much else.

Pedestrian CD Rates

Their CD rates are competitive with the best CD rates [7] but they’re not rate leaders (but they aren’t rate laggards either):

There are no minimum balance requirements on CDs and standard fees for closing a CD before maturity (3 months interest if it’s a 12 month or less CD, 6 months interest for CDs over 12 months). Pretty standard stuff.

Account Fees

While there are no monthly fees and no minimums, there are fees associated with the account, set out in the Fees and Charges section of the Terms & Conditions [8]:

If you do open an account, be sure to avoid excessive transactions (more than 6 transfers a month [9]) and request paperless statements.

What are you thoughts on this account? I’m especially interested in hearing from people who use Upromise a lot to get a sense of how much they’re earning in a calendar year. If the most active people are earning $1,000 a year, then an extra $100 is going to be great. If most people are earning $100 a year, then $10 is… eh, so so.