[SaveBetter / Sallie Mae] 2.2% No Penalty CD. What is the catch here?

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nitpick
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[SaveBetter / Sallie Mae] 2.2% No Penalty CD. What is the catch here?

Post by nitpick »

https://www.savebetter.com/banks/sallie ... penalty-cd

https://dsusprd01pubassets.blob.core.wi ... d573e1.pdf

Just want to check if I have large some of money sitting in checking with 1.5%, should I just change to this CD and come back to checking if interest rates rise.

[Title edited for clarity -- moderator oldcomputerguy]
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typical.investor
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Re: 2.2% No Penalty CD. What is the catch here?

Post by typical.investor »

nitpick wrote: Sat Jul 09, 2022 8:10 pm https://www.savebetter.com/banks/sallie ... penalty-cd

https://dsusprd01pubassets.blob.core.wi ... d573e1.pdf

Just want to check if I have large some of money sitting in checking with 1.5%, should I just change to this CD and come back to checking if interest rates rise.
For yield yes. For liquidity needs, consider how long it will take them to process an account closure. I'll guess a few days but have no idea really. Could you wait for the withdrawal to process?
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Re: 2.2% No Penalty CD. What is the catch here?

Post by arcticpineapplecorp. »

the only thing i see is under the rate there's fine print that says these are the rates for non-jumbo cds under $100,000.

so perhaps that rate is only good on a CD that has <$100,000 in it?
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nitpick
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Re: 2.2% No Penalty CD. What is the catch here?

Post by nitpick »

That’s a great question and yeah if they hold funds for whatever reason it would not be ideal. I will try something small to begin and will try.
Lastrun
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Re: 2.2% No Penalty CD. What is the catch here?

Post by Lastrun »

Take a look at this:

https://www.depositaccounts.com/banks/p ... nk/offers/

and this

https://www.depositaccounts.com/blog/20 ... place.html

I must confess I do not understand these new fangled arrangements between the banks and a fintech overlay, which it appears what Raisin is.

But the one issue that concerned me was the ACH in an out capabilities. Something you would want in a NPCD versus just a regular CD where you will willing to wait until term under most circumstances.
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Re: 2.2% No Penalty CD. What is the catch here?

Post by gougou »

1 year US Treasury is yielding 2.9% right now. So the catch is they are making a 0.7% margin on you.
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Re: 2.2% No Penalty CD. What is the catch here?

Post by CletusCaddy »

gougou wrote: Sat Jul 09, 2022 9:12 pm 1 year US Treasury is yielding 2.9% right now. So the catch is they are making a 0.7% margin on you.
You're not guaranteed 2.9% if you sell that Treasury before one year. Whereas you are guaranteed 2.2% if you do the same with the NPCD.
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Re: 2.2% No Penalty CD. What is the catch here?

Post by nalor511 »

CletusCaddy wrote: Sat Jul 09, 2022 9:14 pm
gougou wrote: Sat Jul 09, 2022 9:12 pm 1 year US Treasury is yielding 2.9% right now. So the catch is they are making a 0.7% margin on you.
You're not guaranteed 2.9% if you sell that Treasury before one year. Whereas you are guaranteed 2.2% if you do the same with the NPCD.
ibonds are making 9% with a 3mo interest penalty after 12mo... so if you can commit to 12mo, 2.2% (or even 2.9%) is not the best
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Re: 2.2% No Penalty CD. What is the catch here?

Post by CletusCaddy »

nalor511 wrote: Sat Jul 09, 2022 10:00 pm
CletusCaddy wrote: Sat Jul 09, 2022 9:14 pm
gougou wrote: Sat Jul 09, 2022 9:12 pm 1 year US Treasury is yielding 2.9% right now. So the catch is they are making a 0.7% margin on you.
You're not guaranteed 2.9% if you sell that Treasury before one year. Whereas you are guaranteed 2.2% if you do the same with the NPCD.
ibonds are making 9% with a 3mo interest penalty after 12mo... so if you can commit to 12mo, 2.2% (or even 2.9%) is not the best
Missing the point, which is that the 2.2% has no commitment of any kind.
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Re: 2.2% No Penalty CD. What is the catch here?

Post by nalor511 »

CletusCaddy wrote: Sat Jul 09, 2022 10:03 pm
nalor511 wrote: Sat Jul 09, 2022 10:00 pm
CletusCaddy wrote: Sat Jul 09, 2022 9:14 pm
gougou wrote: Sat Jul 09, 2022 9:12 pm 1 year US Treasury is yielding 2.9% right now. So the catch is they are making a 0.7% margin on you.
You're not guaranteed 2.9% if you sell that Treasury before one year. Whereas you are guaranteed 2.2% if you do the same with the NPCD.
ibonds are making 9% with a 3mo interest penalty after 12mo... so if you can commit to 12mo, 2.2% (or even 2.9%) is not the best
Missing the point, which is that the 2.2% has no commitment of any kind.
I understood. I think the interest rate for a 2.2 npcd is not compelling in light of the alternatives.
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Re: 2.2% No Penalty CD. What is the catch here?

Post by halivingston »

Maybe they have a better treasury ladder backing this? I mean I can probably write a program that given today's yield curve can purchase things so that I get a guaranteed 2.2 payout after 14 months backed by good old treasuries.
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Re: 2.2% No Penalty CD. What is the catch here?

Post by jebmke »

arcticpineapplecorp. wrote: Sat Jul 09, 2022 8:18 pm the only thing i see is under the rate there's fine print that says these are the rates for non-jumbo cds under $100,000.

so perhaps that rate is only good on a CD that has <$100,000 in it?
Might be. Often “great rates” are targeted at small amounts.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
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Re: 2.2% No Penalty CD. What is the catch here?

Post by tibbitts »

nalor511 wrote: Sat Jul 09, 2022 10:00 pm
CletusCaddy wrote: Sat Jul 09, 2022 9:14 pm
gougou wrote: Sat Jul 09, 2022 9:12 pm 1 year US Treasury is yielding 2.9% right now. So the catch is they are making a 0.7% margin on you.
You're not guaranteed 2.9% if you sell that Treasury before one year. Whereas you are guaranteed 2.2% if you do the same with the NPCD.
ibonds are making 9% with a 3mo interest penalty after 12mo... so if you can commit to 12mo, 2.2% (or even 2.9%) is not the best
I-bonds would require establishing trusts, or at least gifting, so there's non-trivial effort required vs. opening a CD.
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Sallie Mae - 14 month No penalty CD - 2.5%

Post by b4nash »

[Merged into existing discussion - moderator oldcomputerguy]

Seems like the best rate for "liquid" savings?

https://www.savebetter.com/banks/sallie ... penalty-cd
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Re: 2.2% No Penalty CD. What is the catch here?

Post by CletusCaddy »

2.5% now. Will be moving my EF over there tomorrow
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Re: 2.2% No Penalty CD. What is the catch here?

Post by nisiprius »

This is the catch, as noted by Lastrun:

Image

This is a third party business that is linked to banks, but isn't a bank.

In theory, you to ought do some due diligence and figure out exactly who is taking care of your money.

Here are some of the entities mentioned that are involved somehow. I don't say this is the complete list, I might have missed some. What is the role each of these performs, and how are they interconnected?

What is Sallie Mae Bank?
What is SaveBetter?
What is Raisin?
What is Deposit Solutions?
What is Central Bank of Kansas City ("the Service Bank?").
What is Lewis and Clark bank ("Custodian services are provided by Lewis and Clark Bank?")

Where is your money being held, exactly--Sallie Mae Bank, Central Bank of Kansas City, or Lewis and Clark Bank? At none of them, but rather at one of the "numerous U.S. banks and credit unions" they mention?

Do you even know which bank it is? Do you have an individually identifiable account in your own name at the bank where your FDIC-insured deposit is held? Do you know the account and routing numbers? If SaveBetter or Raisin or Deposit Solutions encounters some kind of issue, such as glitches in its website, can you bypass them to get your money out of the bank--or are you reliant on the quality of SaveBetter and its website, IT, and customer service?
Last edited by nisiprius on Thu Jul 28, 2022 8:35 pm, edited 1 time in total.
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Re: 2.2% No Penalty CD. What is the catch here?

Post by nisiprius »

And Lastrun's article at DepositAccounts answers some of my questions. My underlining:
SaveBetter’s main issue now is that you don’t actually hold individual deposit accounts at a partner bank. Instead, you hold a piece of a large deposit account, what’s called an “omnibus custodial deposit account.” You still have FDIC deposit coverage, but you don’t have an account number and routing number that you can use to access the account from outside the SaveBetter platform.
According to the FDIC's BankFind tool, SaveBetter is not a member of the FDIC, but Sally Mae Bank is.
Last edited by nisiprius on Thu Jul 28, 2022 8:39 pm, edited 1 time in total.
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Re: 2.2% No Penalty CD. What is the catch here?

Post by CletusCaddy »

nisiprius wrote: Thu Jul 28, 2022 8:22 pm This is the catch, as noted by Lastrun:

Image

This is a third party business that is linked to banks, but isn't a bank.

In theory, you to ought do some due diligence and figure out exactly who is taking care of your money.

Here are some of the entities mentioned that are involved somehow. I don't say this is the complete list, I might have missed some. What is the role each of these performs, and how are they interconnected?

What is Sallie Mae Bank?
What is SaveBetter?
What is Raisin?
What is Deposit Solutions?
What is Central Bank of Kansas City ("the Service Bank?").
What is Lewis and Clark bank ("Custodian services are provided by Lewis and Clark Bank?")

Where is your money being held, exactly--Sallie Mae Bank, Central Bank of Kansas City, or Lewis and Clark Bank? At none of them, but rather at one of the "numerous U.S. banks and credit unions" they mention?

Do you even know which bank it is? Do you have an individually identifiable account in your own name at the bank where your FDIC-insured deposit is held? Do you know the account and routing numbers? If SaveBetter or Raisin or Deposit Solutions encounters some kind of issue, such as glitches in its website, can you bypass them to get your money out of the bank--or are you reliant on the quality of SaveBetter and its website, IT, and customer service?
A lot of FUD but the bottom line is the money is held at Lewis and Clark Bank

https://dsusprd01pubassets.blob.core.wi ... d573e1.pdf
Last edited by CletusCaddy on Thu Jul 28, 2022 8:37 pm, edited 2 times in total.
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Re: 2.2% No Penalty CD. What is the catch here?

Post by squirrel1963 »

CletusCaddy wrote: Thu Jul 28, 2022 6:26 pm 2.5% now. Will be moving my EF over there tomorrow
I would feel very nervous in keeping emergency funds in a CD. If the issuer defaults there will be a substantial delay in getting back the principal, it happened to me on a CD I had in 2008, and had to wait 3 months.

Not worth the risk, IMHO EF money should in be in treasuries, regardless of the yield.
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Re: 2.2% No Penalty CD. What is the catch here?

Post by CletusCaddy »

squirrel1963 wrote: Thu Jul 28, 2022 8:37 pm
CletusCaddy wrote: Thu Jul 28, 2022 6:26 pm 2.5% now. Will be moving my EF over there tomorrow
I would feel very nervous in keeping emergency funds in a CD. If the issuer defaults there will be a substantial delay in getting back the principal, it happened to me on a CD I had in 2008, and had to wait 3 months.

Not worth the risk, IMHO EF money should in be in treasuries, regardless of the yield.
I have a $100k line of credit with instantaneous transfers to my primary checking account for liquidity needs.

But I do see your point. One month Treasuries are at 2.2% and are state tax exempt. That is very close to 2.5% taxable equivalent yield
Last edited by CletusCaddy on Thu Jul 28, 2022 8:53 pm, edited 1 time in total.
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Re: 2.2% No Penalty CD. What is the catch here?

Post by nisiprius »

CletusCaddy wrote: Thu Jul 28, 2022 8:36 pmA lot of FUD but the bottom line is the money is held at Lewis and Clark Bank

https://dsusprd01pubassets.blob.core.wi ... d573e1.pdf
Image

What is the role of Sallie Mae Bank, then? It's supposed to be a Sallie Mae Bank CD. How can your money be held at Lewis and Clark Bank, yet at the same time be invested in a Sallie Mae Bank account?
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Re: 2.2% No Penalty CD. What is the catch here?

Post by CletusCaddy »

nisiprius wrote: Thu Jul 28, 2022 8:42 pm
CletusCaddy wrote: Thu Jul 28, 2022 8:36 pmA lot of FUD but the bottom line is the money is held at Lewis and Clark Bank

https://dsusprd01pubassets.blob.core.wi ... d573e1.pdf
Image

What is the role of Sallie Mae Bank, then? It's supposed to be a Sallie Mae Bank CD. How can your money be held at Lewis and Clark Bank, yet at the same time be invested in a Sallie Mae Bank account?
The money is held at Lewis and Clark.

The marketing label on the product is Sallie Mae.

The fintech platform is SaveBetter/Raisin.

It’s like when I buy an airplane ticket at Expedia that is marketed as United Express but is actually operated by Republic Airlines.
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Re: 2.2% No Penalty CD. What is the catch here?

Post by anon_investor »

CletusCaddy wrote: Thu Jul 28, 2022 8:50 pm
nisiprius wrote: Thu Jul 28, 2022 8:42 pm
CletusCaddy wrote: Thu Jul 28, 2022 8:36 pmA lot of FUD but the bottom line is the money is held at Lewis and Clark Bank

https://dsusprd01pubassets.blob.core.wi ... d573e1.pdf
Image

What is the role of Sallie Mae Bank, then? It's supposed to be a Sallie Mae Bank CD. How can your money be held at Lewis and Clark Bank, yet at the same time be invested in a Sallie Mae Bank account?
The money is held at Lewis and Clark.

The marketing label on the product is Sallie Mae.

The fintech platform is SaveBetter/Raisin.

It’s like when I buy an airplane ticket at Expedia that is marketed as United Express but is actually operated by Republic Airlines.
Yuck, give me some T-Bills...
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Re: 2.2% No Penalty CD. What is the catch here?

Post by vtMaps »

nisiprius wrote: Thu Jul 28, 2022 8:22 pm This is a third party business that is linked to banks, but isn't a bank.
It sounds like the Fidelity CMA, where your money is held in a FDIC partner bank, but you must go through Fidelity to access your money.

--vtMaps
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Re: 2.2% No Penalty CD. What is the catch here?

Post by donaldfair71 »

CletusCaddy wrote: Thu Jul 28, 2022 8:39 pm
squirrel1963 wrote: Thu Jul 28, 2022 8:37 pm
CletusCaddy wrote: Thu Jul 28, 2022 6:26 pm 2.5% now. Will be moving my EF over there tomorrow
I would feel very nervous in keeping emergency funds in a CD. If the issuer defaults there will be a substantial delay in getting back the principal, it happened to me on a CD I had in 2008, and had to wait 3 months.

Not worth the risk, IMHO EF money should in be in treasuries, regardless of the yield.
I have a $100k line of credit with instantaneous transfers to my primary checking account for liquidity needs.

But I do see your point. One month Treasuries are at 2.2% and are state tax exempt. That is very close to 2.5% taxable equivalent yield
If willing/able to tap a line of credit for liquidity needs, I don’t understand why you are looking into CDs.

If the CD is part of an asset allocation long term, the line of credit isn’t an alternative in times of need. If the CD is an emergency fund, you have the emergency covered with the line of credit, allowing whatever you were planning to put into the CD to go to more risky assets.
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Re: 2.2% No Penalty CD. What is the catch here?

Post by Bogle101 »

The catch is 2.2% isn’t a great rate right now.
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Re: 2.2% No Penalty CD. What is the catch here?

Post by CletusCaddy »

Bogle101 wrote: Thu Jul 28, 2022 8:59 pm The catch is 2.2% isn’t a great rate right now.
But 2.5% is
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Re: 2.2% No Penalty CD. What is the catch here?

Post by nisiprius »

CletusCaddy wrote: Thu Jul 28, 2022 8:50 pm...The money is held at Lewis and Clark.

The marketing label on the product is Sallie Mae...
They really seem to be different banks, not different badges on the same bank.

Lewis and Clark Bank
FDIC Cert #58428
15960 S Agnes Ave
Oregon City, OR 97045

Sallie Mae Bank
FDIC Cert #58177
175 S West Temple
Suite 600
Salt Lake City, UT 84101
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Re: 2.2% No Penalty CD. What is the catch here?

Post by CletusCaddy »

donaldfair71 wrote: Thu Jul 28, 2022 8:59 pm
CletusCaddy wrote: Thu Jul 28, 2022 8:39 pm
squirrel1963 wrote: Thu Jul 28, 2022 8:37 pm
CletusCaddy wrote: Thu Jul 28, 2022 6:26 pm 2.5% now. Will be moving my EF over there tomorrow
I would feel very nervous in keeping emergency funds in a CD. If the issuer defaults there will be a substantial delay in getting back the principal, it happened to me on a CD I had in 2008, and had to wait 3 months.

Not worth the risk, IMHO EF money should in be in treasuries, regardless of the yield.
I have a $100k line of credit with instantaneous transfers to my primary checking account for liquidity needs.

But I do see your point. One month Treasuries are at 2.2% and are state tax exempt. That is very close to 2.5% taxable equivalent yield
If willing/able to tap a line of credit for liquidity needs, I don’t understand why you are looking into CDs.

If the CD is part of an asset allocation long term, the line of credit isn’t an alternative in times of need. If the CD is an emergency fund, you have the emergency covered with the line of credit, allowing whatever you were planning to put into the CD to go to more risky assets.
I am willing to use the LOC for very short term liquidity but I am not willing to keep a debit balance on it because then I would have to pay interest.

So I keep my EF in the highest yielding zero risk instrument I can find, and I am able to tolerate up to a few months of illiquidity but no more than that, in order to pay off the LOC.
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Re: 2.2% No Penalty CD. What is the catch here?

Post by CletusCaddy »

nisiprius wrote: Thu Jul 28, 2022 9:02 pm
CletusCaddy wrote: Thu Jul 28, 2022 8:50 pm...The money is held at Lewis and Clark.

The marketing label on the product is Sallie Mae...
They really seem to be different banks, not different badges on the same bank.

Lewis and Clark Bank
FDIC Cert #58428
15960 S Agnes Ave
Oregon City, OR 97045

Sallie Mae Bank
FDIC Cert #58177
175 S West Temple
Suite 600
Salt Lake City, UT 84101
I never claimed they were the same bank. Sallie Mae wants to get its name out there. So they pay SaveBetter to brand this product with its name. That is the extent of the relationship. Sallie Mae doesn’t touch the deposited money at all.

It’s up to SaveBetter to find the real bank to hold the money, and they have chosen Lewis and Clark. Sallie Mae couldn’t care less about that part of things, as long as the SaveBetter user experience is decent and the underlying custodian bank is a real bank. The fact that they have agreed to this marketing relationship implies Sallie Mae has done its diligence along these fronts.
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Re: 2.2% No Penalty CD. What is the catch here?

Post by CletusCaddy »

The advantage of a No Penalty CD over a HYSA or rolling 1 month Treasuries is that the NPCD rate is guaranteed for the term of the CD, in this case 14 months, whereas the HYSA/Treasuries can reduce rates at any time.

I know it’s hard to conceive of right now, but the chances of the Fed reversing course on interest rates sometime in the next 14 months is not zero.
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Re: 2.2% No Penalty CD. What is the catch here?

Post by PghPharmBoy »

Maybe I’m reading this wrong, but it seems to me that the funds get ACH’d into Lewis & Clark and then consolidated and sent to the program bank (Sallie Mae)…? Same would happen on the reverse - L&C would be the custodian of the funds after withdrawn from SM and before they get ACH’d to your account?

See below from the website (bolding mine):
Each customer authorizes the Custodian Bank to hold the customer’s funds in a custodial capacity in order to facilitate the customer’s deposits to and withdrawals from deposit accounts at various Product Banks that the customer requests through SaveBetter.com. The Custodian Bank does not establish the terms of the deposit accounts, or offer the deposit accounts to customers, and provides no advice to customers about deposit accounts. Central Bank of Kansas City, Member FDIC, d.b.a. Central Payments is the Service Bank. Custodian services are provided by Lewis and Clark Bank.
Source: https://www.savebetter.com/faq (at the very bottom of the page)
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Re: Sallie Mae - 14 month No penalty CD - 2.5%

Post by LISD »

You can get a T-Bill paying ~2.8% state tax free. Not as liquid but it's only 1 year in maturity, and pays more. If you're in a tax free state, it's not much more though.
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Re: 2.2% No Penalty CD. What is the catch here?

Post by nisiprius »

vtMaps wrote: Thu Jul 28, 2022 8:57 pm
nisiprius wrote: Thu Jul 28, 2022 8:22 pm This is a third party business that is linked to banks, but isn't a bank.
It sounds like the Fidelity CMA, where your money is held in a FDIC partner bank, but you must go through Fidelity to access your money.

--vtMaps
Exactly. It also sounds like Beam Financial, which displayed "FDIC insured" on its website, but collapsed and left customers unable to withdraw money for something like six months.

When opening a bank account, "member FDIC" tells most of us all we want to know about safety. But if there is an intermediary between you and an FDIC-insured bank, you are also relying on the financial soundness and the operational competence of that intermediary.

Fidelity is a 76-year-old, $24 billion company, with 70,000 employees, managing 4.5 trillion in assets. And it is perfectly upfront about what a CMA account is and IIRC always has been. In their own words, a CMA is "a smart alternative to a bank account." Cash management accounts were a Merrill Lynch innovation of the 1970s, and are a reasonably known quantity. They are provided by heavily regulated brokerages with long experience of handling large sums of money.

SaveBetter appears to be a $6 million company with 32 employees. It was launched in 9/2021. It is owned by a German firm, Raisin GmbH, which appears to be a $24 million company with 100 employees, founded in 2012.

Not that it matters much, since Lewis and Clark Bank is, as I fully expected, a member of the FDIC--but it, too, is a smallish bank with 42 employees, 3 locations, and $466 million in deposits.

At this point in the discussion, I think we have still not resolved the question of exactly where your money is held when you buy a "Sallie Mae Bank" (or a "Ponce Bank" or an "MPH Bank") CD through SaveBetter. And how does the "service bank," "Central Bank of Kansas City, Member FDIC, d.b.a. Central Payments" come into the picture? In the process of depositing and withdrawing is your money held, at various times, at any of three FDIC-insured banks? Whose employees provide customer service if there are any glitches?

When you withdraw $10,000 "from" your Sallie Mae CD, does Lewis and Clark Bank front the money for you out some pool of money it has, and then reimburse itself from the Sallie Mae CD it owns? Or does it withdraw from the CD, hold it briefly, and pass it on to you... by way of "Central Payments" maybe?

As always, if SaveBetter (and Raisin GmbH and Deposit Solutions) grow and prosper, it will all be fine.
Last edited by nisiprius on Fri Jul 29, 2022 7:21 am, edited 4 times in total.
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nisiprius
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Re: Sallie Mae - 14 month No penalty CD - 2.5%

Post by nisiprius »

[Superfluous posting as threads on same topic have now been merged]
Last edited by nisiprius on Fri Jul 29, 2022 8:21 am, edited 1 time in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Walobolo
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Re: 2.2% No Penalty CD. What is the catch here?

Post by Walobolo »

CletusCaddy wrote: Thu Jul 28, 2022 8:50 pm
nisiprius wrote: Thu Jul 28, 2022 8:42 pm
CletusCaddy wrote: Thu Jul 28, 2022 8:36 pmA lot of FUD but the bottom line is the money is held at Lewis and Clark Bank

https://dsusprd01pubassets.blob.core.wi ... d573e1.pdf
Image

What is the role of Sallie Mae Bank, then? It's supposed to be a Sallie Mae Bank CD. How can your money be held at Lewis and Clark Bank, yet at the same time be invested in a Sallie Mae Bank account?
The money is held at Lewis and Clark.

The marketing label on the product is Sallie Mae.

The fintech platform is SaveBetter/Raisin.

It’s like when I buy an airplane ticket at Expedia that is marketed as United Express but is actually operated by Republic Airlines.
Good example. Also the exact reason I would stay away from this deal, there are too many parties involved. If something does happen it could be a nightmare to get your money back.

Real life example using your example: Had a flight booked thru Expedia from Ukraine to US in April 2020. Covid happens and flights get canceled. Booking was with Expedia so I have to deal with them. Takes multiple phone calls and hours of time over 8 months to get a refund.

Almost 2 years later I book another flight from Ukraine to US for April 2022. This time go straight to Lufthansa. Costs a few dollars more than the travel sights. Russia invades and flights out of Ukraine get canceled. Family get out of the country but at the last minute ends up crossing to Hungary and not Poland due to long lines at the border. I have had to change this travel itinerary now 3 times. Each time took only 15-20 minutes.

Pandemics happen. Wars happen. Fraud happens. Bankruptcy happens.

You have this money in a savings account for a reason. The reward is not high enough to take a risk on such a convoluted chain of banks and entities.
CletusCaddy
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Re: 2.2% No Penalty CD. What is the catch here?

Post by CletusCaddy »

nisiprius wrote: Fri Jul 29, 2022 6:25 am At this point in the discussion, I think we have still not resolved the question of exactly where your money is held when you buy a "Sallie Mae Bank" (or a "Ponce Bank" or an "MPH Bank") CD through SaveBetter.
This has been fully resolved. Per the PDF I linked to above, the money is held at Lewis and Clark Bank. The customer service is handled by SaveBetter. That’s it. Everything else is just FUD.
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nisiprius
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Re: 2.2% No Penalty CD. What is the catch here?

Post by nisiprius »

CletusCaddy wrote: Fri Jul 29, 2022 9:43 am
nisiprius wrote: Fri Jul 29, 2022 6:25 am At this point in the discussion, I think we have still not resolved the question of exactly where your money is held when you buy a "Sallie Mae Bank" (or a "Ponce Bank" or an "MPH Bank") CD through SaveBetter.
This has been fully resolved. Per the PDF I linked to above, the money is held at Lewis and Clark Bank. The customer service is handled by SaveBetter. That’s it. Everything else is just FUD.
Just to be clear, this is the language you are referring to?
Each customer authorizes the Custodian Bank to hold the customer’s funds in a custodial capacity in order to facilitate the customer’s deposits to and withdrawals from any product at Sallie Mae Bank that the customer requests through SaveBetter.com. The Service Bank does not establish the terms of the deposit accounts or offer the deposit accounts to customers and provides no advice to customers about deposit accounts at Sallie Mae Bank. Lewis and Clark Bank, Member FDIC, is the Custodian Bank.
Note, too, that the "service bank" isn't named in that PDF, and according to the main website "Central Bank of Kansas City, Member FDIC, d.b.a. Central Payments is the Service Bank."
Last edited by nisiprius on Fri Jul 29, 2022 10:01 am, edited 1 time in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
CletusCaddy
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Re: 2.2% No Penalty CD. What is the catch here?

Post by CletusCaddy »

nisiprius wrote: Fri Jul 29, 2022 9:58 am
CletusCaddy wrote: Fri Jul 29, 2022 9:43 am
nisiprius wrote: Fri Jul 29, 2022 6:25 am At this point in the discussion, I think we have still not resolved the question of exactly where your money is held when you buy a "Sallie Mae Bank" (or a "Ponce Bank" or an "MPH Bank") CD through SaveBetter.
This has been fully resolved. Per the PDF I linked to above, the money is held at Lewis and Clark Bank. The customer service is handled by SaveBetter. That’s it. Everything else is just FUD.
Just to be clear, this is the language you are referring to?
Each customer authorizes the Custodian Bank to hold the customer’s funds in a custodial capacity in order to facilitate the customer’s deposits to and withdrawals from any product at Sallie Mae Bank that the customer requests through SaveBetter.com. The Service Bank does not establish the terms of the deposit accounts or offer the deposit accounts to customers and provides no advice to customers about deposit accounts at Sallie Mae Bank. Lewis and Clark Bank, Member FDIC, is the Custodian Bank.
Yes
Philly30
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Re: [SaveBetter / Sallie Mae] 2.2% No Penalty CD. What is the catch here?

Post by Philly30 »

Up to 2.7 now
FellsGuy
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Re: [SaveBetter / Sallie Mae] 2.2% No Penalty CD. What is the catch here?

Post by FellsGuy »

If it is a large sum of money then doubtful you would need it all instantaneously for an emergency, I assume. If giving it to Sallie Mae is this anxiety producing why fight it? Just ladder T-Bills and keep the fast cash in the money market / checking account you have. I'm not sure what a large sum is but when you do the math 10-20 bps here or there are not worth not being able to sleep at night.
Fidelity has CD's at 315 bps and Treasuries at 327 bps for 1 year all FDIC insured or backed by the full faith and credit of The US Government.
“Annual income twenty pounds, annual expenditure nineteen nineteen and six , result happiness. | Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery”
CletusCaddy
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Re: [SaveBetter / Sallie Mae] 2.2% No Penalty CD. What is the catch here?

Post by CletusCaddy »

Philly30 wrote: Wed Aug 17, 2022 9:25 am Up to 2.7 now
Thanks for the notice. So here goes my attempt to get out of the 2.5% to get into the 2.7%.
exodusNH
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Re: 2.2% No Penalty CD. What is the catch here?

Post by exodusNH »

CletusCaddy wrote: Fri Jul 29, 2022 9:43 am
nisiprius wrote: Fri Jul 29, 2022 6:25 am At this point in the discussion, I think we have still not resolved the question of exactly where your money is held when you buy a "Sallie Mae Bank" (or a "Ponce Bank" or an "MPH Bank") CD through SaveBetter.
This has been fully resolved. Per the PDF I linked to above, the money is held at Lewis and Clark Bank. The customer service is handled by SaveBetter. That’s it. Everything else is just FUD.
While your money may be FDIC protected, you can only access it as long as SaveBetter's app/site is functioning properly. The people who put their money in Beam probably felt the same way.

This is different from someone like HM Bradley, where you do get the underlying routing and account numbers and can pull your money out independently of HM Bradley's good graces / properly operating tech.

In the event of the collapse of SaveBetter, you would almost certainly be made whole. But that might take several months to sort out.

Note that I have no money at any of the banks/fintechs mentioned here.
Tom_T
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Re: Sallie Mae - 14 month No penalty CD - 2.5%

Post by Tom_T »

LISD wrote: Thu Jul 28, 2022 11:41 pm You can get a T-Bill paying ~2.8% state tax free. Not as liquid but it's only 1 year in maturity, and pays more. If you're in a tax free state, it's not much more though.
You can buy a six-month T-Bill today yielding 3%.
CletusCaddy
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Re: 2.2% No Penalty CD. What is the catch here?

Post by CletusCaddy »

exodusNH wrote: Wed Aug 17, 2022 10:51 am
CletusCaddy wrote: Fri Jul 29, 2022 9:43 am
nisiprius wrote: Fri Jul 29, 2022 6:25 am At this point in the discussion, I think we have still not resolved the question of exactly where your money is held when you buy a "Sallie Mae Bank" (or a "Ponce Bank" or an "MPH Bank") CD through SaveBetter.
This has been fully resolved. Per the PDF I linked to above, the money is held at Lewis and Clark Bank. The customer service is handled by SaveBetter. That’s it. Everything else is just FUD.
While your money may be FDIC protected, you can only access it as long as SaveBetter's app/site is functioning properly. The people who put their money in Beam probably felt the same way.

This is different from someone like HM Bradley, where you do get the underlying routing and account numbers and can pull your money out independently of HM Bradley's good graces / properly operating tech.

In the event of the collapse of SaveBetter, you would almost certainly be made whole. But that might take several months to sort out.

Note that I have no money at any of the banks/fintechs mentioned here.
I have more faith in the tech capabilities of an upstart like SaveBetter than I do Vanguard.
CletusCaddy
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Re: [SaveBetter / Sallie Mae] 2.2% No Penalty CD. What is the catch here?

Post by CletusCaddy »

CletusCaddy wrote: Wed Aug 17, 2022 9:51 am
Philly30 wrote: Wed Aug 17, 2022 9:25 am Up to 2.7 now
Thanks for the notice. So here goes my attempt to get out of the 2.5% to get into the 2.7%.
An update here that may help others considering this product.

There is no way to cancel the CD online. You have to call customer service. 12 minutes on hold and 1 min of chatting. The proceeds automatically get sent to your linked bank account
Philly30
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Re: [SaveBetter / Sallie Mae] 2.2% No Penalty CD. What is the catch here?

Post by Philly30 »

CletusCaddy wrote: Wed Aug 17, 2022 1:09 pm
CletusCaddy wrote: Wed Aug 17, 2022 9:51 am
Philly30 wrote: Wed Aug 17, 2022 9:25 am Up to 2.7 now
Thanks for the notice. So here goes my attempt to get out of the 2.5% to get into the 2.7%.
An update here that may help others considering this product.

There is no way to cancel the CD online. You have to call customer service. 12 minutes on hold and 1 min of chatting. The proceeds automatically get sent to your linked bank account
Then can you open a new one online right away?
CletusCaddy
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Re: [SaveBetter / Sallie Mae] 2.2% No Penalty CD. What is the catch here?

Post by CletusCaddy »

Philly30 wrote: Wed Aug 17, 2022 1:11 pm
CletusCaddy wrote: Wed Aug 17, 2022 1:09 pm
CletusCaddy wrote: Wed Aug 17, 2022 9:51 am
Philly30 wrote: Wed Aug 17, 2022 9:25 am Up to 2.7 now
Thanks for the notice. So here goes my attempt to get out of the 2.5% to get into the 2.7%.
An update here that may help others considering this product.

There is no way to cancel the CD online. You have to call customer service. 12 minutes on hold and 1 min of chatting. The proceeds automatically get sent to your linked bank account
Then can you open a new one online right away?
Well you have to wait for the funds to settle in your bank account, but after that yes.
CletusCaddy
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Re: [SaveBetter / Sallie Mae] 2.2% No Penalty CD. What is the catch here?

Post by CletusCaddy »

CletusCaddy wrote: Wed Aug 17, 2022 1:09 pm
CletusCaddy wrote: Wed Aug 17, 2022 9:51 am
Philly30 wrote: Wed Aug 17, 2022 9:25 am Up to 2.7 now
Thanks for the notice. So here goes my attempt to get out of the 2.5% to get into the 2.7%.
An update here that may help others considering this product.

There is no way to cancel the CD online. You have to call customer service. 12 minutes on hold and 1 min of chatting. The proceeds automatically get sent to your linked bank account
And today the money hit my bank account.

So that’s the catch. You have to call them to withdraw early and it takes three business days for the money to arrive.
CletusCaddy
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Re: [SaveBetter / Sallie Mae] 2.2% No Penalty CD. What is the catch here?

Post by CletusCaddy »

Ponce Bank through SaveBetter now offering No Penalty CD at 3% for 36 months

https://www.savebetter.com/cd-accounts/ ... y-cd-rates
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