Dedicated to Deposits: Deals, Data, and Discussion

New Online Savings Account at Union Federal Savings Bank


Union Federal Savings Bank
Update 1/09/10: The APY has fallen from 1.25% to 1.20%. Refer to the bottom of the post for the rate history.

Union Federal Savings Bank has a new online money market account with a yield of 3.50% APY for all balances. It has no minimum balance requirements or monthly fees. According to the CSR, the money market account was just started in early May.

Since it lacks check writing, I consider it an online savings account. As a no-minimum online savings account, the yield is currently very competitive. However, we've seen many other online savings accounts which start out competitive and slowly drop off. We'll have to wait and see how this one goes.

It does have an ACH transfer capability, but with some limitations. According to the banking rep, it only allows for one link to an external bank account (the original link set up to fund the account). This link can be used for deposits and withdrawals. They also allow you to transfer out funds to another bank account by entering the bank's routing and account number for each time you want to do a withdrawal. I was told they are working on an enhancement to establish more formal links to other bank accounts.

Below is a summary of the account features based on the FAQ's, the Rates and Fees Schedule, the Personal Deposit Agreement, and from my discussion with the the customer service representative (CSR):

General Account Features
  • 3.50% APY on all balances as of 7/15/08
  • No minimum balance requirements
  • No monthly service charges
  • No check writing
  • compounded daily and credited monthly
Opening the Account
  • Available to people in any state
  • No hard credit inquiry, only a soft pull (per CSR)
  • Minimum initial deposit is $1
  • Maximum initial deposit is $100,000
  • Online application (by Andera) is used to open account
  • Signature card must be mailed in
  • Account is funded by electronic funds transfer via ACH
  • The external account used to fund the initial deposit (initial link) can be a savings or checking account

Electronic Funds Transfer Features
  • The initial linked account can be used for additional deposits and withdrawals after the account is opened
  • Only the initial link can be set up (per banking rep)
  • ACH deposits are generally available on the day they're received
  • Typically, funds are received 3 to 5 business days after transaction is initiated
  • ACH transfers are free
  • ACH withdrawals are limited to the standard 6 per month limit as required by regulation
  • No dollar limit on the ACH transfers as long as the balance remains under the maximum balance limit (per CSR)

Large Balance Features
  • Accounts are limited to a maximum balance of $1 million (confirmed with banking rep)
  • Only one beneficiary can be specified per account
  • Does not support Trusts as beneficiaries (or account holders)

Union Federal Savings Bank is a small bank located in Rhode Island. It has 23 employees and $647 million in assets based on FDIC's 3/31/08 data. It was established in 2001, and is FDIC insured (FDIC Certificate # 57189). It has a 4-star rating (excellent) at BauerFinancial based on 3/31/08 data.

Thanks to the reader who emailed me info on this new online account.

Other High Yield Online Savings Accounts

To compare Union Federal Savings' money market account to accounts at other banks and credit unions, please refer to my weekly savings account summary. As of 7/15/08, the highest non-promo yield for a savings account is 3.75% APY.

Update 7/22/08: Corrections made to ACH capabilities, max balances and beneficiaries.
Update 7/17/08: Corrections made to ACH capabilities based on new info from banking rep.

Rate History:
Update 01/09/10: The APY has fallen from 1.25% to 1.20%.
Update 12/19/09: The APY has fallen from 1.40% to 1.25%.
Update 12/12/09: The APY has fallen from 1.50% to 1.40%
Update 12/05/09: The APY has fallen from 1.60% to 1.50%.
Update 11/21/09: The APY has fallen from 1.65% to 1.60%.
Update 10/24/09: The APY has fallen from 1.70% to 1.65%.
Update 10/17/09: The APY has fallen from 1.80% to 1.70%.
Update 9/26/09: The APY has risen from 1.75% to 1.80%.
Update 8/01/09: The APY has fallen from 2.00% to 1.85%.
Update 6/27/09: The APY has fallen from 2.05% to 2.00%
Update 5/02/09: The APY has fallen to 2.10%.
Update 4/25/09: The APY has fallen to 2.15%.
Update 3/21/09: The APY has fallen from 2.40% to 2.25%.
Update 1/17/09: The APY has fallen to 3.10%.
Update 8/1/08: The yield has increased from 3.50% to 3.75% APY.

  Tags: Union Federal Savings Bank , savings account

Related Posts

Comment #1 by larkin (anonymous) posted on
Rate increased to 3.75%

Comment #2 by Sofa King Frustrated (anonymous) posted on
Sofa King Frustrated
If they only allow just one beneficiary, your FDIC coverage is still just $100,000. You would need at least two beneficiaries to get over $100,000.

So, I guess it is dumb of this bank to only allow one beneficiary.

Comment #3 by Anonymous posted on
You can open multiple $100,000 accounts with one beneficiary each.

Comment #4 by jwbodnar (anonymous) posted on
Has anyone else had problems with Union FSB? Opening the account, while cumbersome (seemed like a lot of steps, separate postal mails for online login and password, etc.) went OK.

Where I am having a problem is trying to set up ACH push into the account. For starters, it took Union FSB forever (5+ days) to credit the verification deposits from the likes of GMAC, E*TRADE, and WaMu. And, they actually messed up the WaMu procedure, crediting both the two trial deposits and the sum of the two that is supposed to withdrawn.

I was able to validate the account with WaMu, but then I got a message from WaMu that Union FSB said the account or routing number is wrong and that they are deleting the account. Double-checked, and the numbers are right, but WaMu can't restore the deleted account...

Anyone else running into this kind of mess with Union FSB. I called today to double check on the account and routing numbers because some institutions (mainly credit unions) often have numbers pre- or post-fixed to the main account number. Doesn't appear to be the case with WaMu, so I think I may end up having to spend a lot of time on the phone with Union FSB to figure out what the h*ll is going on.

Comment #5 by Anonymous posted on
jwbodnar Ever get that straightened out?

Comment #6 by Anonymous posted on
As part of the account opening process, you must "authorize Equifax Secure, Inc. to access my credit file to authenticate my identity and facilitate the processing of this application for this Union Federal Savings Bank account only." I am not certain if you get a hard inquiry on your credit report from this.

Comment #7 by Anonymous posted on
Had a small test withdrawl of my own that never went through. Even though I had the confirmation number all customer service could say was to do it over. Needless to say the test rated an "F".

ACH service is slow, at LEAST (2) days and inconsistent, not the next day like Countrywide (who no longer pays high rates). Website doesn't have links set up, you have to put all the numbers in manually each time to ACH. (I'll bet this costs them in errors.)

Had no trouble getting my money back in (1) day using a Countrywide link! So now I'll get (14) bucks less per month but believe me it's not worth the hassle. Now I'm going to try DollarSavingingsDirect (alias of Emigrant Bank, where I had no problems before except low rates) when the dust settles as they have the same rate, currently 3.75% ($1,000 min.).

Comment #8 by Anonymous posted on
Bankguy, this rate is now 1.1%

Comment #9 by Banking Guy (anonymous) posted on
Banking Guy
1.1%? I'm still seeing 3.05% APY on their website.

Comment #10 by Anonymous posted on
Banking Guy, Union FSB has a new ACH transfer system in place. Need to register and verify accounts (so they stay in system now). Might want to update your post on them.

Here is an email I received:

"Dear Customer,

Union Federal wants to make saving money easier and more rewarding for you. That's why we have enhanced our Funds Transfer process, making it simpler and automated. Please be assured that nothing has changed regarding your accounts themselves, we have only updated the systems for making transfers between accounts to improve your ability to transfer funds more easily.

Before you can make your first transfer using the new process, you will be asked to re-establish your transfer access. For your protection, when you request your first transfer, you will be prompted to set up a second user name and password for transferring funds. You will also need to verify any account which you have at another Financial Institution before being able to proceed--even if you’ve previously executed transfers with this institution. When you enter the name of your institution, you will be given one of two options:

1. For most institutions you can use the ‘Instant Account Verification’ option, but if your Financial Institution is not pre-set in the system, you will be directed to use option #2.
2. You can execute a ‘Test Deposit Verification’ where a small amount (<$1) is transferred which you will be asked to verify. It may take 2-3 business days for this test transaction to process, so please take this set-up time into account when planning your first transfer.

Again, re-establishing your transfer access is for your protection and is only required prior to the first time you make a transfer using this new process."

To others, has anyone tested this new system out?

Comment #11 by Anonymous posted on
rate dropped to 2.80%

Comment #12 by Anonymous posted on
It's true that for the ACH you no longer have to put the numbers in each time but it's just as slow as before. Good rate though today -

Comment #13 by Steve (anonymous) posted on
I've been a customer for many months. Service is pretty good for small bank, tho cumbersome login procedure, pretty basic web page. ACH transfers out take four business days, very slow. But they DO allow me to set up a recurring transfer by ACH to my sister's account which is registered in her name only, a big service plus.

Comment #14 by boblothrope posted on
They now have ACH limits!  $20,000 per day, $100,000 per week, $120,000 per month, $300,000 per quarter.