Update 8/6/2012: The top yield now applies to all balances up to $250K. Previously, the balance had to be at least $5K for interest to be earned.
Less than a month since UFB Direct launched a new money market account, UFB Direct raised the yield of this account from 1.15% to 1.25% APY. This yield applies to all balances up to $250,000. 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.
It has been about one year since Bank of Internet USA (now called BofI Federal Bank) started UFB Direct with its high yield Airline Rewards Savings Account. 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 this rate hike, it appears UFB Direct wants this money market account to get more attention. With this rate hike, UFB Direct's Money Market account rate is now a leader with a rate that matches the intro rate at EverBank and the rate at TIAA Direct.
This rate hike doesn't help answer the question about how long will it be before this rate falls. 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.
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. Here are the limits that I've been told:
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.
Standard transfers are free, and there should be no dollar limits on UFB Direct's side when you initiate transfers from another bank. Please refer to my UFB Direct savings account review for more details about UFB Direct online banking.
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).