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UFB Direct's New 2% US Savings Account - How Long Will This Last?

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Update 1/09/2010: The rate has fallen to 1.55% APY. Refer to the bottom of the post for the rate history.

UFB Direct is offering yet another online savings account with a competitive rate. This new one is called US Savings. The rate as of 6/22/09 is 2.00% APY. There are no minimums and no monthly fees.

It appears UFB Direct hasn't changed much in the last few years. They still don't seem to have a free ACH transfer system. (see update below) They have a service called MoneyHQ in which you can initiate electronic funds transfers, but it still costs $2 for both deposits and withdrawals. Their fees page lists this fee and other potential fees. For other details of UFB Direct and their savings accounts, please refer to this account review. If you see things that have changed since this old post, please leave a comment.

Update 7/26/09: A reader has reported that UFB Direct now provides free ACH transfers. The 3-day standard transfers are free, and you can set up to 3 external accounts. Here is what the reader described in the comments:
I just wanted to update on both outgoing and ingoing ach's so long as you use the standard 3 day transfer, it is free to your linked external banks. There is a fee if you want next day. Don't go through money HQ, go through transfers, and then there is a tab for external transfers, set up to 3 external accounts and your good to go.

How long will it last?

This account review is probably more of a warning than a deal alert. UFB Direct has a long history of coming out with new high-interest accounts. After around 4 to 8 months, the rate plummets, and before long they start another new account with a high rate. So if you open this account, you need to make sure to keep an eye on it. Not only have they slashed rates, but they've also started monthly fees. Their Absolute Savings Account started out with no monthly fees. It now has a fee of $5/month for balances under $10,000.

UFB Direct appears to be trying to change by offering the following guarantee:
UFB Direct guarantees to keep the yield on your account in the top 10% of competitive accounts as tracked on Bankrate.com National Index. All right reserved.

I wonder what national index at Bankrate.com they're referring to. If it's similar to what the FDIC is now using, the top 10% may still be low for internet savings accounts.

Another downside of UFB Direct is that it isn't a bank. It's just a banking center. Here's what they describe in their FDIC page:
Deposit Products offered through this Banking Center are FDIC insured up to an aggregate of $250,000* per customer through one of the following participating FDIC insured financial institutions. See Disclosures for details.

View Waterfield Bank FDIC Certificate #34976

View Bank of America, FDIC Certificate #3510

View Citibank, FDIC Certificate #7213

View Huntington National Bank, FDIC Certificate #6560

On their rates page they state the following:
Deposit Processing Services Offered Through This Site Are Provided By Waterfield Bank

It appears Waterfield is the main bank that holds most of UFB Direct's deposits, but as UFB Direct's FDIC page states, other banks may also be used.

Other High Yield Savings Accounts

To find high yield savings accounts available nationwide, refer to my weekly rate update.

Rate History:
01/09/10: 1.55% APY
11/28/09: 1.60% APY
11/07/09: 1.70% APY
10/17/09: 1.75% APY
10/08/09: 1.80% APY
09/16/09: 1.85% APY
06/22/09: 2.00% APY
Related Pages: savings account

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Comments
ichaelm
  |     |   Comment #1
I have a checking account w/ Waterfield Bank. It used to be called American Partners Bank.The savings account rate is tiered, with a maximum APY of 1.50%, so I agree; I can't see UFB's 2% rate holding up for more than a month or two.
Anonymous
  |     |   Comment #2
One reason I have kept my UFB account aive (with a low balance) is because the refund some of your ATM fees charged by other institutions. Also, if you travel internationally like I do, they don't charge a currency conversion fee on their ATM usage over there.

The main caveat, as you mentioned, is you have to make sure they aren't putting your money into a bank you have already maxed out the FDIC insurance on.

They will opt out of any bank you choose if you tell them.
Anonymous
  |     |   Comment #3
It looks to me as if you can now link up to 3 accounts and get free incoming transfers (without using the moneyhq). Outgoing I think is $2. I just mailed their bankmail, because on their fee schedule they do list free outgoing ach's, but I see no way to do such a transaction, from them, I bet they mean by initiating at an external place then it's free. I have only stuck with them for so long because since I haven't got much in savings now, and not in the mood to switch to another bank for an extra measily 1%.
Anonymous
  |     |   Comment #4
I opened 8 savings accounts since new year, and every single one went down a week or two after opening.
I give up chasing rates, it is a just a waist of time. UBS is not exemption to the rule, I bet FDIC will make a phone call to UBS's CEO in a week time.
Anonymous
  |     |   Comment #5
2% is nothing to write home about. It's getting very crowded at the bottom, so even if they lowered their rate in the near future, they can't lower it too much anyway.
ichaelm
  |     |   Comment #6
UFB dreamed up another savings account last fall which no one has even mentioned, probably because it was so short-lived. It was called the Traveler's Savings Account, and the rate dropped from 4% to 1% in a matter of months. Banking Guy wrote a review of the account. This bank, if you want to call it a bank, should face disciplinary action for its endless bait-and-switch tactics.
Anonymous
  |     |   Comment #7
I agree with ichaelm, that this "bank" is ethically challenged, so to speak. I'd call the men running the "bank" a bunch of thieves because they took away my remaining balance as fees and then, in the middle of my secure mail correspondence with them, removed my online access! The moral of the story: Stay away from this so-called "bank."
Anonymous
  |     |   Comment #8
I've been doing business with this bank for about 3-4 years. Started out as UFBDirect(owned as a division by Waterfield bank), then banking was managed by Huntington Bank, then most recently by the main bank Waterfield. Its true that they keep dropping rates and launching new accounts with better rates. But its super easy to open the New better rate account. I had a High Yield Savings, then rate dropped, so I move $ into their Absolute Savings, rate dropped, then moved $ into Traveler Savings, then rate dropped, now US Savings. I think Waterfield is managing their bottom line much tighter, since they lowered deposit rates and started minimum $ levels necessary in order have fees waived. Its not a bad bank. They mail free statements w/postage paid envelopes for future deposits, refund ATM fees. I actually recently closed my Traveler savings since it dropped to 1%, but would have moved it to Direct savings if I knew it was available. I kept my free checking, because their user interface is simple. So not a great bank, not a bad bank, you just have to watch your rate levels like a hawk. Hope this is helpful to anyone looking into this bank.
Anonymous
  |     |   Comment #9
I just wanted to update on both outgoing and ingoing ach's so long as you use the standard 3 day transfer, it is free to your linked external banks. There is a fee if you want next day. Don't go through money HQ, go through transfers, and then there is a tab for external transfers, set up to 3 external accounts and your good to go.
Anonymous
  |     |   Comment #10
Waterfield Bank received a cease-and-desist order from the FDIC recently according to the Baltimore Sun. They may be in danger of failing:

News article
Anonymous
  |     |   Comment #11
The FDIC just shut down Waterfield Bank.

Link

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