Salem Five's OSA - Competitive Rate, MA DIF Insurance, Some Challenges

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For several years, Salem Five's online savings account has been one of the most competitive online accounts available. Many of our readers suggest that we remove it because it has features that are more onerous and difficult to understand than some of the other savings accounts listed on the site. recognizes these issues but feels that it Salem Five needs to be listed among the best yielding savings accounts because these issues can be worked around.

Salem Five is a Massachusetts-based financial institution that has been a competitor in the online savings space for many years. Its online savings rate today stands at 1% and that is among the most competitive online savings rates. Because Salem Five is a Massachusetts bank, it is covered under the Massachusetts DIF policy that insures each depositor’s accounts, regardless of state of their residence, to a maximum of $1 million.

Over the last several years, two series of problems have become evident with Salem Five Direct’s online savings accounts. These problems have been highlighted to by our readers and we feel that they still need to be addressed by Salem Five.

First, promotional rates are higher than the rates in the post-promotion period and the rates in the post-promotion period are not transparent on the face of the site. considers the practice of offering a rate dramatically above market to be a bait-and-switch tactic and warns depositors of this tactic.

Salem Five’s post-promotional rates have always been 5 to 10 basis points below its promotional rates which tend to be the only ones listed on its website. Salem Five should be more transparent about its promotional and post-promotion rates. Depositors simply should not be required in the post-promotion period to log in to their account weekly or monthly to find out how much below the advertised promotional rate they are earning.

While Salem Five now seems to have suspended, at least temporarily, the practice of issuing promotional rates, we have always found that their entire promotional savings rate thing played into the hands of whoever was writing the script for the Ally Bank television ads.

Second, transfers out of the Salem Five Direct Savings Account are not free and severely limited in ways not consistent with the US online savings account market

When using Salem Five Direct’s online banking interface, depositors are limited to $5,000 per transaction, $5,000 in aggregate per day; and $20,000 in aggregate per calendar month. Each outbound ACH transfer initiated through Salem Five has a $3 charge. These limits are very onerous - actually ridiculous. Using Salem Five’s website, it would take a year and cost $144 to move $240,000 out of Salem Five Direct. Under no circumstance do these limits and charges match the market practices for online savings accounts. Their very existence is material to depositors and perspective depositors, and they are not cardinally disclosed on Salem Five's website.

Allso not disclosed on Salem Five’s website is the very fact that the market creates a work-around for the limits and charges. By initiating your ACHs out of Salem Five through another online bank account, such as CIT, Synchrony or Ally, you can avoid Salem Five's transfer limits and fees. Your Salem Five Direct account can easily be set up and confirmed as an ACH transfer account using their routing number (211370558) and your account number.

The feedback that we have received from readers that Salem Five Direct has drawbacks that other online banks do not have is entirely correct. We think it is within BestCashCow’s role as the most comprehensive and informative U.S.-based website on personal savings issues to make consumers aware of the existence of Salem Five’s products. We also think Salem Five needs to take active steps to provide its customers with better rate disclose and match market practices regarding online ACH transfers.

Compare the best online savings rates here.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to bank transparency and the climate crisis. Since co-founding BestCashCow in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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