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).
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.