Why is Sallie Mae a Bank Now?
Sallie Mae is getting into the online savings business. It makes sense I guess. They offer college loans and are finding, just like any lender, that they can do more loans by possibly taking on customers via online savings. Perfect marketing strategy actually. Get a bunch of guys like me with a kid to save money in their savings account and then by the time my kid needs to go to college, I use my savings, 529 plan, and add on a Sallie Mae loan to cover the rest. Genius.
Also, it probably doesn’t hurt them to get a nice influx of cash right now. That, plus, I think online banking is just becoming more acceptable these days, and since Sallie Mae doesn’t have to build bank buildings to make this happen, it works out for them.
About the Sallie Mae Savings Account
Their savings account it pretty straight forward. The rate is good compared to other online savings accounts. There is no minimum balance requirements like EverBank has. Although there are some minimum requirements if you want to take advantage of the 10% Upromise earnings match. See more below.
Fees? The only fees that I see on the account are a $5 statement fee (which you incur only if you have a statement mailed to you) and an excessive transaction fee (which is standard for online savings accounts) of $10 for each monthly withdrawal over 6. These fees are online savings industry standard and should never affect you if you just use the account as a normal savings account.
Certificates of Deposit
There are three different CD options at Sallie Mae: 12 months, 36 months, and 60 months. The rates are pretty straight forward and there are no minimums. The early withdrawal fees are standard. See how they compare with other CD rates and consider a CD laddering strategy.
To compliment your Upromise account and Sallie Mae savings account, sign up for the Upromise MasterCard Credit Card. This card has no annual fee, it comes with a $25 bonus and a 0% balance transfer option, and you earn bonus rewards points towards your Upromise college savings. See my full Upromise Credit Card review.
Upromise 10% Annual Match on Earnings
This is where the Sallie Mae savings account shines. If you are Upromise user and earn a decent amount from Upromise each year, you will want to take advantage of this account. Here’s how the match works. Sallie Mae will look at your Upromise earnings at the end of the year (Dec 31) and multiply your total earnings for the year by 10%. They will then fund your Sallie Mae savings account with those bonus funds. That means if you earn $500 in Upromise earnings during the year, Sallie Mae will pay you $50 in bonus money. Nice.
Requirements to get the match:
To be eligible for the match you have to link your savings account to your Upromise account, and do one of the following: set up a automatic savings deposit of at least $25 OR fund the account with $5,000. Earnings from the annual match will be deposited in your savings account each February.
How To Open Either the Savings Account or the CDs
You will need to visit Sallie Mae Bank. Select which account you want (savings or CD). Then, provide the following information: SSN, drivers license or other ID, and checkbook to get your account and routing number for the initial deposit. You will also need joint account member info if you plan on making it a joint account.
The set up process is really quick. And once you’ve made your initial deposit you’re off and running. Remember to get the 10% Upromise earnings bonus you will need to create the $25 automated savings deposit, or fund at least $5k.