Sallie Mae Bank Savings Account Named Best Online Savings Account

I have followed Kiplinger’s Personal Finance Magazine’s annual Best List for several years. The parts that I am particularly interested in are those bests in savings accounts, credit cards, and investments, topics that I discussed quite a lot here.

Over the week, the December issue of the magazine arrived, with its 2010 list. When I turned to the page with the Best Online Savings Account, I wasn’t surprised when I saw Sallie Mae Bank Savings Account was this year’s recipientĀ of the award because the bank offers a high-yield savings account that has “no monthly fees and a respectable rate.” I opened an Sallie Mae Account in May and have gradually transferred all my moneys from a few other savings accounts to Sallie Mae since then. The reason for the move was, of course, rate chasing. At 1.40% APY, no other banks with which I have an account with have a better rate. And based on my definition, that rate alone would make it the best.

Unfortunately, the good time can only last so long. Last week, the bank lowered the rate from 1.40% to 1.30%. While a little disappointed the reduction, I plan to keep almost all of our cash savings with Sallie Mae because even with the rate cut, Sallie Mae Bank still remains to be one of the best online savings banks that offer competitive rates in this tough economic environment. With current yield of 1.30% APY and no minimum deposit required to open an account and no monthly fee, there’s only a few banks that can match the interest rate from Sallie Mae. Since I want to my money to work the hardest for me, there’s no reason for me to switch banks now.

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After seeing a few banks raised rates in the summer, I thought the trend of cutting rates for years has finally been reversed. Now it doesn’t look like that’s going to happen, especially after the Fed decided to print another $600 billions to keep the rate low, and the dollar weaker and export competitive, to stimulate the economy. In fact, in recent days I saw banks started to cut rates again after being quiet for awhile. Another bank which lowered savings account rate is Ally Bank, going quietly from 1.29% to 1.20%. Hopefully, it won’t become the beginning of another round of race to the bottom.

BTW, speaking of Kiplinger’s best savings account award, I noticed something quite interesting. In the past couple of years, Kiplinger has named some very popular banks as the best. For example, as I remember, FNBO Direct was the winner two years ago, and Ally Bank got the nod last year. At the time when those banks were recognized, they were both indeed at the top. But shortly after the awards, things started to turn bad. I hope this doesn’t happen to Sallie Mae. Otherwise, I will blame Kiplinger’s award for “destroying” another bank :)

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One Response to “Sallie Mae Bank Savings Account Named Best Online Savings Account”

  1. Grant |  Nov 10, 2010 at 1:46 pm

    I’m a huge fan of Ally Bank. Transferred money over from ING because the rates were higher. Their non-penalty CD’s are great, especially when the rates seem ready to take off. I would definitely recommend them to others!