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Bank of Internet's New Airline Miles Rewards Savings & Checking Accounts

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Bank of Internet has launched UFB Direct with two products: an Airline Rewards Savings Accounts and an Airlines Rewards Checking Account. Both of these allow customers to earn miles/points. The feature that is most noteworthy is the interest rate of the savings account. It's 1.30% APY for all balances (as of 8/4/2011).

Both accounts have no minimum balance requirement and no monthly maintenance fee. Customers of either account can use Free MyDeposits which allows customers to deposit checks from your home computer and scanner. It eliminates having to mail checks.

It appears the Airline Rewards Checking doesn't offer any interest. One perk is unlimited ATM reimbursements (excluding international transactions). Another small perk is the first order of 50 checks is free (If ordered at account opening).

The main selling point with these accounts is the airline miles/points. The savings account just has two ways to earn points:

  • 500 airline miles/points 90-days after you open the account.
  • additional 500 miles/points after the account has been open for one year.

The checking account has more ways to earn miles/points:

  • 1 mile/point for every $2 Point of Sale (POS) debit transaction posted to your account.
  • one-time additional 1,000 Miles/Points after having a direct deposit totaling $1,000 or more in one calendar month.

According to UFB Direct, earning miles/points is automatic. When opening your account you just select your participating Airline and enter your Mileage Rewards number.

The links to the online applications at UFB Direct point to bankenrollment.com which is the same as Bank of Internet. Bank of Internet is one of the oldest pure internet banks. Its financials have remained strong. Currently, it has an overall health score at DepositAccounts.com of 4 stars (out of 5) with a Texas Ratio of 12.25% (above average) based on March 2011 data. Please refer to our financial overview of Bank of Internet USA for more details. The bank has been a FDIC member since 2000 (FDIC Certificate # 35546).

My Take

I find it very interesting that Bank of Internet acquired the UFB Direct name and URL. UFB Direct used to be an internet bank with deposits held by Waterfield Bank. The bank failed on March 5, 2010, and UFB Direct was shut down.

The 1.30% APY is very competitive in today's rate environment. As a comparison, the best non-promo savings account rate is 1.25% APY for balances of at least $100K at Incredible Bank. However, I would not call this 1.30% APY at UFB Direct a non-promo rate. I would be surprised if this rate doesn't fall before the end of the year. It has been a while since Bank of Internet had competitive rates on its savings accounts. The highest rate is currently 0.80% APY on its High Yield Savings Account. Its new reward checking account pays 1.25% APY, but this has monthly usage requirements to qualify for this rate (see my review).

Another option for those looking for airline miles is BankDirect. I did a review of BankDirect in April. Unlike UFB Direct, BankDirect doesn't offer any decent interest rates. Instead of interest, you are rewarded with airline miles. To earn significant number of miles at UFB Direct, customers will need to be heavy users of the UFB Direct debit card.

  Tags: savings account, checking account, Bank of Internet USA, UFB Direct

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Comments
11 comments.
Comment #1 by Anonymous posted on
Anonymous
Bank Direct has recently halved the number of Aadvantage miles earned to 50 per $1000 in their MMA.

3
Comment #2 by Anonymous posted on
Anonymous
This airline savings program is some "bonus" program. At the end of year ONE a savings account owner would have received a total of  1,000 miles and at the end of year FIVE only 2,000 additional miles (500 miles for the last FOUR years) resulting in the "grand" total of 3,000 miles for years ONE THROUGH FIVE which is less than 1/4 of the typical MINIMUM requirement of 12,500 miles for a domestic one-way ticket purchased using "frequent flyer" miles--if the customer is lucky enough to find an available flight using only 12,500 miles.

4
Comment #3 by Anonymous posted on
Anonymous
If youw ant to earn miles for your everyday banking check out UFB's checking account wher you earn points on every dollar you spend and you get cash back purchase rewards on your debit car.

 

    • Earn rewards for everyday banking:
1 mile/point for every $2.00 Point of Sale (POS) debit transaction posted to your account.

You’ll receive a one-time additional 1,000 Miles/Points after having a direct deposit totaling $1,000 or more in one calendar month.

Earning miles/points is automatic — when opening your account you just select your participating Airline* and enter your Mileage Rewards number. Your airline miles accumulate as you use your debit card for Point of Sale (POS) transactions.

1
Comment #4 by Anonymous posted on
Anonymous
If the Waterfield family has anything to do with this, run away fast. They are crooks who purposely buy banks to drive them into the ground. The FDIC picks up the pieces and they peraonally profit. Thus far they have done this twice that I know of.

2
Comment #6 by Jo (anonymous) posted on
Jo
I think that if I wanted to accumulate airline miles of any worth, I'd go with a credit card that specifically offers miles for every purchase made based on dollar amount. The miles accumulate faster, too. Nothing like the K*I*S*S method.

Of course, this is if the balance is paid off each month; otherwise, there aren't any significant savings.

1
Comment #7 by Anonymous posted on
Anonymous
Looks like you lose a lot of interest on both inbound and outbound transfers.  "ACH Funding will be posted upon final credit from the external bank; typically 2 - 3 business days after the new account is opened."   Also, "Interbank Transfer - Standard 3-day processing, per item (Incoming and Outgoing)-Free"  However, "Interbank Transfer - Next Day processing, per item (Outgoing)-$5.00.  So a "round trip" transfer of funds would lose 5 to 6 days interest, slightly less if you pay the $5 fee.  No thanks! 

I was not impressed with Bank of Internet's customer service when I had accounts there several years ago.  I doubt that they'll be any better as UFB Direct.

 

3
Comment #8 by Anonymous posted on
Anonymous
I was only offered AA when opening the account. If that's true, that seriously sucks.

1
Comment #9 by Anonymous posted on
Anonymous
And...I think my earlier comment (Anonymous #2) was too generous with this bank "bonus" because I later realized they probably promising only 1,000 ONLY for a savings account "bonus"...500 earlier on and 500 after a year and not 500 each additional year after the first year. And if you can get miles on one airline only--AA only?

1
Comment #10 by pattyb53 posted on
pattyb53
My UFB Direct acct is opened!   Got the ACH transfer's with Alliant CU set up with small deposit ok'd.

Now today, 8/10, made my first large ACH transfer in to the Airline Reward Savings. 1.30% APY interest.

The AA air milage is just a minor bonus, but I will take it! 

 

1
Comment #11 by Anonymous posted on
Anonymous
Ken-addressing your post, third column, you stated, "it appears the Airline Rewards Checking doesn't offer any interest."  

 They are advertising 1.30% on checking & savings accts as of 8/4/2011. Can you please explain, as I am currently thinking about opening an account to trans a large sum based on the 1.30% they are advertising.

Any help you can offer will be appreciated.  Thank you.....

1