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Thread: Sallie Mae MMA

  1. #1
    God/dess whirlerz's Avatar
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    Default Sallie Mae MMA

    Thinking of opening an online MMA checking account w/them..are online accts. safe? Thanks


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    Banned Melonie's Avatar
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    Default Re: Sallie Mae MMA

    Sallie Mae is obviously a quasi-gov't entity ... which implies some level of US taxpayer protection for deposits made in whatever form in addition to FDIC insurance on certain forms of deposits. Thus a Sallie Mae money market deposit is about as safe as they come.

    Sallie Mae is currently offering a 1.1% money market account, an interest rate which is above comparable interest rates available from most alternative local sources. On the other hand, a 0.3% interest rate differential versus the available rate at local banks only amounts to an extra $3 a year per $1000 invested. The risk assumed, of course, is that you can't walk into a local Sallie Mae office or walk up to a Sallie Mae ATM and walk out with cash. Instead you have to deal with bank account transfers ( with potential fees), or snail mail checks or money orders etc., involving days of delay at minimum. Granted that you can write checks against a Sallie Mae MMA, but the local bank cashing the check may not make that amount immediately available to your local bank account.

    Also, I was unable to find whether Sallie Mae places a limit on the number of checks that can be written against their MMA per month. Typically, MMA's are limited to 6 checks per month ... which is a deliberate measure intended to dissuade depositors from using their MMA as a substitute for a 'bill-paying' checking account.

    IMHO if you're going to sacrifice instant liquidity for higher rate of return, that rate of return should be much more advantageous than an extra $3 per $1000 per year available from Sallie Mae versus a local financial institution.

    ~
    Last edited by Melonie; 09-21-2011 at 10:26 AM.

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