Nation's Top Savings Account Rate at Bank of Internet's UFB Direct

I first reported on Bank of Internet's new division UFB Direct on August 4th. The main focus of UFB Direct is airline mileage rewards that you can earn with a checking and savings account. However, the savings account currently stands out for its interest rate. As of today, it's 1.30% APY for all balances. This is the highest rate on a nationally available savings account. There's no guarantee how long this will last, but I was told by a BofI official that they have "no current plans to drop the interest rate."

One thing that's important to note is that this new UFB Direct has no connection with the old UFB Direct. That old UFB Direct had its deposits held by Waterfield Bank which failed in March 2010. The old UFB Direct stopped operating when Waterfield was shut down.

This new UFB Direct is a division of Bank of Internet USA. Thus, deposits that you make to UFB Direct will be held by Bank of Internet. This is the oldest pure internet bank, and it has always been financially strong. It's also part of the public company, BofI Holding Inc.. Bank of Internet USA has an overall health score at DepositAccounts.com of 4 stars (out of 5) with a Texas Ratio of 12.59% (above average) based on June 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).

Only the Savings account pays interest. Instead of earning interest, the checking account is continuously paid mileage points for certain behavior. I have more details about the mileage points in my August UFB Direct review.

As I described in my August review, you can also earn a few mileage points with the savings account. However, the most noteworthy feature of the savings account is the high interest rate.

Some of the savings account features noted at UFB Direct include:

• 1.30% APY as of 9/16/2011
• Minimum deposit to open an account is $100
• No minimum balance requirement and no monthly maintenance fee
• Free ATM card

Some of the features shared by both the savings and checking accounts include:

• Free online banking, mobile banking, email and text messaging alerts
• Free MyDeposit - Deposit checks instantly from the comfort of your home or office
• Free postage-paid envelopes

UFB Direct has a bank-to-bank ACH transfer service, but the website currently doesn't provide many details. The BofI official emailed me some of the details. Unfortunately, the transfer limits are low: standard inbound and outbound limit is $2,000 daily and $5,000 monthly. Once you are with UFB Direct for 90 days and have used the standard inbound, had no NSF incidents and have maintained the account in good standing, you can fall in the standard high limit: $15,000 daily and $25,000 monthly.

Other Alternatives for High Yields

Another option to obtain a top yield on a liquid account is Bank of Internet's rewards checking account. In July I first reviewed this account. The top rate is still 1.25% APY on all balances. However, to qualify for this yield there are monthly requirements similar to the standard reward checking accounts.

How These Rates Compare

The only way to get a higher rate on a liquid account that's available nationwide is to choose a reward checking account at another bank or credit union. However, all of those reward checking accounts have balance caps. Most of these limit the top rate to balances of $10K to $25K. You can use our reward account table to find the best reward checking rates. If you don't want to worry about monthly requirements, please refer to our savings account table and money market account table.