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.