Sallie Mae Bank, known as the number one provider of private student loans and the main servicer for federal student loans, in 2010 has introduced savings vehicles for all consumers, not just those attending college.
Chartered in 2005, the Internet-only Sallie Mae Bank has headquarters in Murray, Utah. After decades of providing student loan services, Sallie Mae expanded into personal banking services to help families save for college and to encourage their customers to develop a savings habit. Sallie Mae Bank has $7.5 billion in assets as of 2010.
Upromise: unique to Sallie Mae
Sallie Mae owns the Upromise company, a free service that allows consumers to earn money on their credit card and debit card spending. Whenever the consumer uses a linked card to make a purchase from a qualified retailer, whether for everyday expenses such as groceries and drugstore items or big-ticket items like airline tickets, credits are paid into the consumer’s Upromise account.
These credits can be rolled over into a 529 college savings plan or converted to a check for tuition or books. Family members can contribute to a student’s account by linking their own cards. College students can open Upromise accounts for themselves, too.
Customers can link their Sallie Mae Bank accounts and their Upromise accounts to earn a bonus on their Upromise savings each year. Customers simply need to sign up for a minimum automatic transfer each month into their Sallie Mae savings account or fund the account with a minimum amount within a certain period of time after opening it. The bonus is based on the accumulation of funds in the Upromise account and will be automatically deposited into the Sallie Mae savings account.
Savings account is a specialty
While Sallie Mae remains a prominent provider and servicer of student loans, Sallie Mae Bank focuses its deposit business entirely on savings products and building good savings habits. Customers who want a checking account or a money market account with check-writing privileges will need to go to another financial institution. However, customers can easily transfer funds in and out of a Sallie Mae Bank account.
Sallie Mae Bank offers a high-yield savings account without any monthly fees or minimum balance requirements. Customers can also purchase a certificate of deposit (CD) for a variety of terms. Both CD accounts and savings accounts have interest compounded daily.
Since Sallie Mae Bank is a relative newcomer to Internet banking, the company has relatively few customer reviews online. However, those who have signed on to keep their savings with Sallie Mae Bank have written that they are pleased with the high interest rates and especially appreciate the bonus available through Upromise. Even customers who had not previously opened a Upromise account often opt to begin one in order to earn the bonus.
Customers also appreciate the link between Sallie Mae Bank and their student loan businesses because they like the idea that they are working with a bank that helps people fund a college education.
Each Sallie Mae Bank account is fully FDIC-insured to the maximum of $250,000 per depositor as of July 2010. For joint accounts, each co-owner is insured up to $250,000.
Sallie Mae Bank may be the right choice for those who are saving for college, planning a significant life event or simply wanting to build up an emergency savings fund.