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UFB Direct Launches Money Market Savings Account with a Top Rate


UFB Direct has launched a new money market account with a very competitive rate. Last summer Bank of Internet USA (now called BofI Federal Bank) started UFB Direct. The new money market account has a 1.15% APY (as of 5/30/2012) for balances of $5,000 to $250,000. The account pays no interest for balances under $5,000. There is a $10 monthly maintenance fee, but it can be avoided by maintaining an average daily balance of $5,000. The account details and the rates are listed in the money market section of UFB Direct.

Comparing the Money Market with the Savings Account

Many readers will probably remember UFB Direct and its Airline Rewards Savings Accounts. I first reported on this account last August when the savings account was paying a very competitive yield of 1.30%. This top rate held steady for about 6 months. The rate started to plummet in January. The yield is now 0.80% which puts it in the middle-of-the-pack as compared to other internet banks.

Based on the savings account history, it's likely this money market rate won't hold up over the long run. However, if it holds up for at least 6 months, that can still be a good deal. I was told that current UFB Direct savings account customers can open this money market account as long as they meet the minimum initial deposit requirement of $5,000.

One important downside of this money market account as compared with the savings account is it has a $5,000 minimum balance requirement to earn interest and to avoid a $10 monthly fee. The saving account has no minimum balance requirements or monthly fees. So when the savings account rate dropped, you could move your money without having to worry about fees. It will be more difficult to do the same with this money market account.

If the rate falls too low, you can always close the account. I don't see any closure fee in the disclosure. However, according to the money market savings account terms, "if you close your account before interest is credited, you will not receive the accrued interest to the date of withdrawal."

On the positive side, accounts with minimum balance requirements often have higher rates than those with no minimum balances. So the rate may remain a little more competitive than the savings account over the long run.

In addition to the higher rate, another reason that someone may want the money market account over the savings account is that it offers limited check writing and online bill pay. As required by regulation, withdrawals by check are limited to 6 per statement cycle.

UFB Direct's Online Banking Features

UFB Direct does offer some nice banking features such as online check deposits (called MyDeposit), mobile banking and free postage-paid envelopes. However, the bank-to-bank ACH transfer service has low limits. Please refer to my UFB Direct savings account review for more details. If you have seen any changes in their ACH transfer service, please leave a comment. You should be able to initiate transfers using another bank's ACH service.

UFB Direct & BofI Federal Bank Overview

BofI Federal Bank is putting a lot of resources into UFB Direct. It should be noted that the site's main focus is airline rewards which can be earned primarily with the checking account.

Deposit accounts held at UFB Direct are FDIC insured through BofI Federal Bank (formerly called Bank of Internet USA). BofI Federal 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 9.52% (above average) based on March 2012 data. Please refer to our financial overview of BofI Federal Bank for more details. The bank has been a FDIC member since 2000 (FDIC Certificate # 35546).

Related Pages: UFB Direct, money market accounts

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  |     |   Comment #1
Thank you, Ken.  Sounds like a really good deal!

Am assuming ACH headaches only apply when initiating ACH transactions with UFB.  I will be initiating all ACH activity from outside, so I expect I will not be bound by UFB's limitations.
  |     |   Comment #2
The rate is a teaser, will last couple of months only, like the previous offer.
  |     |   Comment #3
I have a savings account with AMtrust paying 1.15%.  So far has stayed at that rate for a while
  |     |   Comment #4
You pretty much have to check the rates in such accounts as this daily anyway.  OK, maybe not Flagstar for the first four months . . . but most of the other ones.  Nothing is rate stable today.  Nothing.  I recently got clipped at Vist, for example.  It was a 20 basis point decrease.  But I caught it the same day it happened and simply pulled out.  Anybody who expects these rates to hold up for long periods is going to be disappointed.  You have to remain vigilent and play the specials.  Otherwise your aggregate interest rate will fall below 1%.
  |     |   Comment #5
Nice to see a bank sharing some of the money with the customers. This is one of if not the best I've seen.
  |     |   Comment #6
What a deal.  Are they sure they can afford  .0115 ?  
  |     |   Comment #7
Stay away from UFB Direct!!!  Their customer service is terrible, they are drastically understaffed, and they are not interested in working with a customer offline if there are problems with an account. They put a freeze on my account and my Mom's Airlines Rewards savings accounts because we asked that they not call us at home, as many banks do to their customers.  They claim that they also sent us Emails requesting that we contact the bank, which we never received  BofI, the parent company, never once sent us a notice via US mail letting us know they were freezing our accounts because we would not talk to them on the phone.  And the phone calls were incessant and very annoying.  We incurred fees from Alliant Credit Union when we tried to transfer funds from the savings accounts to Alliant checking accounts using Alliant ACH pull, because UFB Direct had failed to notify us that they froze our accounts.  We closed our accounts with them and would strongly recommend that others not open new accounts with UFB Direct. It is not worth the temporary interest rate or the terrible customer service.
  |     |   Comment #8
I closed my account when they lowered the 1.30% earlier.  I never had any problems with UFB Direct. Today I'm going to call and try to reopen my old account and go for the 1.15% Money Mkt.  I'm hoping that they will reopen the closed account. Probably won't happen!
Anonymous #X
  |     |   Comment #9
I agree with Annonimmous #7 comment. My experience also with UFB direct was very bad. It is not worth the temporary interest rate or the terrible customer service.
James Goodman
  |     |   Comment #10
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