Dedicated to Deposits: Deals, Data, and Discussion

UFB Direct Increases Yield on its Traveler's Savings Account to 4.00%

POSTED ON BY

Update 2/22/09: The rate has fallen substantially. the Traveler Savings Account rate is now only 1.05% APY.

UFB Direct raised the yield on its Traveler Savings Account today from 3.80% to 4.00% APY. It has a minimum opening deposit of $500, and a minimum balance of $500 to earn interest. There are no minimum balance fees.

The name traveler has to due with AAdvantage miles that can be earned. 500 miles can be earned for maintaining a $500 monthly average balance for 90 days after the account is funded. Additional miles can be earned for everyday banking activities. This is one of three mileage products described at UFB Direct's mileage page.

Update 12/03/08: A reader has received confirmation from UFB Direct that the Travelers Savings account will not have any changes in monthly fees or new monthly balance requirements. Only the Mileage Savings account, not the Travelers Savings account, will incur a $5.00 monthly maintenance fee for average monthly balance falls below $10,000 starting 1/1/2009.

I've never been a fan of these types of reward programs. The main reason I'm reviewing this account is due to the 4% APY. With rates heading down, the question is how long will they maintain a competitive rate. Based on UFB Direct's history, I would be surprised to see this remain competitive after early next year.

Last year UFB Direct's top savings account was the Absolute Savings Account. I did a review of this account one year ago. At the time it had a yield of 5.31% APY which was near the top. The yield is now at 2.50% APY which is low for online savings accounts. In 2006 UFB Direct's top savings account was the High Yield Money Market Savings. When they came out with the Absolute Savings Account in 2007, they lowered the rates on this Money Market Savings.

So my guess is that UFB Direct will introduce something new next year, and the Traveler's Savings Account yield will become uncompetitive. But there is a chance that UFB Direct will keep this account competitive for several months like it did last year with the Absolute Savings Account. So if you don't mind jumping to another savings account after a few months, this could be a decent deal in the short term.

For the online banking features of this account, I would guess they're similar to those of the Absolute Savings account. I listed those in my 2007 account review.

One thing a little odd about UFB Direct is that it's not a division of a bank. UFB Direct is operated by Affinity Financial Corporation which acts as an agent between you and the bank. The details are described in the disclosure. According to this UFB Direct page:
All deposit products offered through this Banking Center will be opened and deposit processing services provided by The Huntington National Bank. The deposit products are FDIC insured by one of the participating financial institutions

This page also mentions Countrywide Bank as one of the participating FDIC insured financial institutions. As I mentioned in this post, it's best to ask for confirmation from UFB Direct regarding where your deposits will be held.

Update 12/03/08: Waterfield Bank now seems to be the main bank holding UFB Direct deposits. According to UFB Direct's FDIC page:
All deposit products offered through this Banking Center will be opened and deposit processing services provided by Waterfield Bank

However, this page continues to list Huntington National Bank and Countrywide Bank.

Huntington National Bank (FDIC Certificate # 6560) has some decent financial ratings for soundness: 3 stars (adequate) at BauerFinancial and 4 stars (sound) at Bankrate. Both ratings are based on 6/30/08 data.

Thanks to the reader who mentioned this rate change in the finding the best deals post.

  Tags: savings account

Related Posts

Comments
13 Comments.
Comment #1 by Anonymous posted on
Anonymous
Stay away from anything with Huntington National Bank! These folks will **** you on fees if you try and close the account. They also did the AARP accounts and went from 4.75 to 3.0% in weeks. Also, there customer service dept. is very small so if you need anything get ready to wait. Dollar Savings Direct is the King right now at 4.0%

1
Comment #2 by Anonymous posted on
Anonymous
Have quite opposite experience with UFB - never waited on the phone to speak with CSR. The only disadvantage - they don't have ACH.
Advantages:
ATM fee reimbursement,
no minimum balance for checking account,
free link between checking and savings

1
Comment #3 by Anonymous posted on
Anonymous
The lack of ACH is a major problem. In this day and age, people have to wait several days for a paper check to be sent by snail mail, and then have to bring it in to their bank? And these are the very people who are looking for a good yield on their money, and don't want to waste a week without getting any interest on it. And UFB charges for this inconvenience? Then they lower the rate on the account anyway. YUCK

1
Comment #4 by Anonymous posted on
Anonymous
The lack of ACH capability hasn't bothered me because I use other banks to push and pull into UFB with ease. Besides, their FREE Checking has a great overdraft feature which will do a NO-FEE pull from Traveler's Savings when Checking lacks sufficient funds. (If you sign up for Free Checking, be sure to ask them to "link" it to your Savings to get this feature.) The account review already mentioned the advatage of backing by a strong bank (Huntington), and another poster rightfully commented on their excellent customer service. But some other great features haven't been mentioned: (1) Automatically reimbursed ATM fees, up to $4.50/month (2) Unbelievably, the Traveler's Savings doesn't have the usual 6-monthly-withdrawals limit. In fact, there's no limit. I don't know how they can do this, but CS confirmed this feature for me. (3) After the initial $500 funding requirement, there is no need to keep more than $1.00 in the account to earn full interest, unless you want the Advantage Miles bonus.

1
Comment #5 by Anonymous posted on
Anonymous
Correction to my post of a few minutes ago: The account will not earn interest when the balance falls below $500. But there is no fee for falling below $500, so if, say, the APY dropped you could keep the account open (whether permanently, or just until you've passed the early-closing-fee period) by leaving a couple bucks in there. Besides, even if the APY did "fall of a cliff," it would still be an outstanding APY for a free, unrestricted checking account -- which is essentially what you get with the account-linking and free overdraft protection I described.

1
Comment #6 by Anonymous posted on
Anonymous
About the fee's I just got a new book in the mail that starting Jan 1, 2009, Interest savings like absolute savings and mileage savings, have a $5.00 monthly maintenance fee, for balances < 10k. MM and interest checking, have $5.00 maintenance fee for < $200. (checking linked to savings then no fee). Free checking still appears to be free lol. Paper statements are going to be $3/statement, Outbound wires-$30, overdraft $35/item. From articles I have read over the past month, sounds like this maybe a thing to come. So not only do you get little return on your money but they want to fee you to death. :(

1
Comment #7 by CaspianXI (anonymous) posted on
CaspianXI
Yup, I got the same booklet in the mail. I'll be closing all my accounts with UFB direct at the end of the year... Traveler's Savings was too good to be true :(.

BTW, this fee change is due to UFB changing "ownership." Previously, UFB's assets were held by Huntington -- now, they're switching to Waterfield. Apparently, the new people don't look kindly on little people like me who don't have $10k to keep in savings!

1
Comment #8 by Anonymous posted on
Anonymous
This is all kind of weird, as UFB has been a part of Waterfield Financial (via its Affinity division) all along. But it has been administered by Huntington instead of "Waterfield Bank." Assuming the expected rate plunge early next year from top-tier to also-ran, I'll be closing all my UFB accounts as well.

1
Comment #9 by Anonymous posted on
Anonymous
Will the $5.00/month fee for dropping below $10,000 apply even if the average balance for the month is still over $500?

1
Comment #10 by Anonymous posted on
Anonymous
...meant to say $10,000 at the end of that question (not $500).

1
Comment #11 by Anonymous posted on
Anonymous
Now I see why I haven't received anything about the new fees: They apparently don't apply to Traveler's Savings, the account that is paying 4.00 APY until at least Jan 1. CS confirmed in a bankmail that Traveler's Savings is NOT adding a minimum balance requirement.

1
Comment #12 by Anonymous posted on
Anonymous
If it's true that Waterfield Bank is the bank of deposit, then it's only got 2 stars according to Bauer Financial. For some reason I trust Bauer's rating system. Emigrant(dollarsavings) Bank has 3 stars, which is still below the 4 stars I feel comfortable with. Also, ufbdirect's website still shows the FDIC limits at the old amounts, which shows lax service. And a while back I believe they only had 1 star(could be wrong though). I'm sticking with dollarsavings until a stronger bank meets or beats its rate.

1
Comment #13 by Anonymous posted on
Anonymous
Bankrate now shows Dollar Savings with the lowest rating, 1 star. Interestingly, UFB told me deposits are still in Huntington, Countrywide and Waterfield. UFB is indeed slow in terms of website updates. Then again, I've had BofA and USAA's systems **** up on automated function. Both banks ended up failing to make automatic account payments I had properly set up, resulting in Past Due notices and charges. And both readily admitted that the ****ups were at their end.

1