Sallie Mae has been in the student loan business for a long time. Sallie Mae dabbles in other industries of higher education including monthly payment plans, business solutions, bill presentment, online payment processing, and the collection of student loans and tuition debt utilizing collection agencies. Now (as of March 2nd) the organization is expanding their banking services and starting to offer savings accounts and cd’s (certificate of deposit) to existing and new customers.
The following is a statement from Sallie Mae in reference to the new banking services that they will be providing:
The High-Yield Savings Account by Sallie Mae currently offers a 1.35% Annual Percentage Yield (APY) — five times the national average, according to Bankrate.com’s October 2009 Passbook & Statement Savings Study, — and an easy-to-get-started no minimum balance requirement. Customers can earn even more by signing up for Sallie Mae’s free Upromise rewards program that enables members to earn money back on eligible purchases from hundreds of grocery stores, online retailers, restaurants and gas stations. Upromise balances of $10 or more may be automatically transferred into the High Yield Savings Account, and customers with a savings account balance of $5,000 or more or a monthly automated savings plan of $25 or more may qualify for an annual match of 10 percent of their prior year’s Upromise rewards.
Certificates of Deposit by Sallie Mae currently offer competitive interest rates, no minimum balance or monthly fees and terms of 12 months (1.50% APY), 36 months (2.20% APY) or 60 months (3.00% APY).
I have been trying to figure out why Sallie Mae is embarking in this new venture of banking services. The only logical justification that I can render is that it is cheaper for them to build up their cash reserves by offering a savings vehicle for their customers as opposed to obtaining/purchasing the reserves from the federal treasury. I am sure there is someone smarter than I out there that can probably chime in with a better explanation.
In the meantime, if you are looking for a “decent” savings approach for college, a home, or that next vacation, you can check out what Sallie Mae has to offer by visiting the following link: www.salliemae.com/savings
