Sallie Mae Bank has been known for their student loans but they recently opened an internet bank which offers savings accounts and certificates of deposit. Looking at the features of the account and the current interest rates, it seems to be an online bank on solid financial grounds. The current interest rates for their savings account is 1.40% APY as of April 30, 2010. This can still be considered a high yield savings account that is competitive to other online banks.

The high interest savings account also has a nice feature that you can link it to the Upromise rewards scheme.

The Sallie Mae Bank which is an FDIC insured financial institution since 2005 with certificate number 58177 holds the savings account. The online bank has an informative FAQ which pretty much answers some important stuff if you are considering opening an account. If you want more information you can call Sallie Mae through their toll free number 877-3462756.

Savings Account

Here’s some important information about the savings account as we learned from their friendly customer service rep:

• The bank does not collect monthly service fees nor do they require any minimum balance
• The process of opening an account is entirely done online
• After opening the account, you can opt to add beneficiaries
• According to the CSR, they do not do a hard credit pull when you open an account
• ACH service is available
• The bank performs small trial deposits when you link an external account
• You can link as many external account as you want
• There is no limit with regard to ACH transfers
• Withdrawal is limited to the typical six per month
• There is a hold on period for the initial deposit: $5K and below will be held for 5 banking days and anything above $5K for 10 banking days
• Withdrawals via ACH take 2 to 3 banking days to complete
• Earnings are compounded on a daily basis and credited every month

Upromise Program

One unique feature of the savings account with Sallie Mae is that you can link it to their UPromise Rewards Program. It looks like you can get some extra cash back for your purchases which will be on top of what you receive from your debit or credit cards. Earning cash back can be achieved by:

• Buy through Upromise partners at Upromise.com and get 1% to 25% back
• Be a preferred diner by registering your debit or credit card. You can get as much as 8% back when you dine at eligible partner restaurants
• Get 1-3% back for participating items or brands when you register through Upromise and check out using your grocery store card

You can redeem your earnings in several ways: You can put them into your 529 savings plan for college; pay up your student loans; opt to receive a check; and transfer the earnings to your linked Sallie Mae savings account when you have at least a balance of $10.

Another good benefit of linking the savings account with the Upromise program is that they can match your annual Upromise earnings by 10%. The 10% savings match will require you to link your Upromise with your Sallie Mae savings account and after 3 months upon opening, you must setup an automatic savings which deposits at least $25. Another option is to fund your savings account with at least $5,000. Upromise has the option of changing the 10% match any time.

Financial Overview

Sallie Mae Bank is a big financial institution with about $4.7 billion declared assets and deposits of about $3.6 billion. Its ratings are above average with Bankrate.com issuing 4 stars for its performance and BauerFinancial stamping their report for soundness and safety with 3 stars. Both are based on their collected data for September 2009. Take note that Bankrate has a higher rating than BauerFinancial which is very rare.