We have another internet money market account that has increased its rate over 1.00%. Union Federal Savings Bank recently increased the rate of its money market account from 0.90% to 1.05% APY. This applies to all balances.
I first reviewed this money market account 4 years ago when the yield was 3.50%. The rates fell so much in 2009 and early 2010 that I removed the account from my weekly summary. Looking at the recent rate history of this account, it has grown more competitive this year with the yield rising from 0.85% to 0.90% in May and 0.90% to 1.05% last week.
The features of the money market account appear to be the same as they were in 2008. The following account features are described in the bank's FAQs, deposit agreement, rates and fee schedule and EFT disclosure:
- Available nationwide
- $2,500 minimum deposit to open an account
- No monthly fees
- No minimum balance requirements
- No check writing
- Interest compounded daily and credited monthly
- Accounts are limited to a maximum balance of $1 million
- Online application (by Andera) is used to open account
- Account is funded by electronic funds transfer via ACH
- Only one beneficiary can be specified per account (per CSR)
- Trusts cannot be account owners (per CSR)
One thing that appears to have changed is the bank's electronic funds transfer process. According to the bank's FAQs they "have recently enhanced our Funds Transfer process, making it simpler and automated". Linking to external checking or savings accounts can be done by either trial test deposits or instant account verification.
Readers have reported that the ACH transfers are slow. One reader commented:
ACH transfers out take four business days, very slow.
I asked the CSR today about the ACH transfer limits. Here is what I was told:
- $20,000 per day and $100,000 per month outgoing transfer limit (when done using their online system)
- No size limits on incoming transfers
- No limits on the number of links to external accounts
One interesting thing to note about Union Federal Savings Bank is that it has gone down in size in the last four years. When I reviewed this bank in 2008, it had 23 employees and $647 million in assets. Now it has only 11 employees and $132 million in assets based on March 2012 FDIC data. The bank has one office located in North Providence, Rhode Island.
Even though the bank is small, it's financially healthy. It has an overall health score at DepositAccounts.com of 5 stars (out of 5) with a Texas ratio of 7.33% (excellent) based on March 2012 data. Please refer to our financial overview of Union Federal Savings Bank for more details. The bank has been a FDIC member since 2001 (FDIC Certificate # 57189).
How This Money Market Rate Compares
It's nice to see another money market account with a yield of at least 1.00%. In the last few months we have seen a few internet banks increase their rates above 1.00%. Incredible Bank was the latest internet bank that increased its rate. Competition from new internet banks like CIT Bank and Barclays is probably the main reason that we're seeing this.
The only two money market accounts available to new customers with a higher rate are from EverBank and UFB Direct. Both are offering a 1.25% APY. This is a new-account promo at EverBank that will only last for the first 6 months. At UFB Direct, it's not an explicit promo, but based on its history, the rate is unlikely to last past 2012.