UFB Direct has just raised its money market yield from 1.25% to 1.30% APY. This is the second rate increase since UFB Direct introduced this money market account in May. When it was first introduced in May, the yield was 1.15%.
This 1.30% APY applies to all balances up to $250,000. The rate for the portion of the balance over $250,000 is 0.25%. Minimum initial deposit is $5,000, and there's a $10 monthly fee if a $5,000 minimum balance isn't maintained. The account details and the rates are listed in the money market section of UFB Direct.
Coincidentally, it was almost a year ago when UFB Direct was launched with a 1.30% APY savings account. That 1.30% yield held for about 6 months. The yield first went down in January, and it fell again in February until it bottomed out at its current level of 0.80%.
I just reviewed the rate history of UFB Direct's savings and money market accounts compared to other rate leaders in this post.
Will the money market rate follow the savings account rate? If it does, that means we'll likely see at least 4 months of 1.30% APY before the rate falls.
One thing different with the money market account as compared to the savings account is that it requires a $5,000 minimum balance to avoid a $10 monthly fee. That may allow UFB Direct to keep the money market rate a little more competitive than the savings account rate over the long run. On the downside, it will make it harder to move your money if the rate does become uncompetitive.
Another thing to consider is the online banking features. There are some nice features like online check deposits (called MyDeposit), but there are also some weak aspects such as the bank-to-bank ACH transfer service. I have more details in this previous post.
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).
How This Money Market Rate Compares
With this rate hike, UFB Direct's money market rate is now the highest of all internet banks. It was actually already on top with a 1.25% APY if you exclude intro rates and accounts that are not available to new customers. EverBank is offering a 6-month intro rate of 1.25% for new customers. After that intro period, the rate returns to the standard rate (currently 0.76%). That intro rate is also limited to a maximum balance of $50K for the money market account and $100K for the checking account. TIAA Direct still has a 1.25% APY on its savings and money market accounts. However, this is temporarily no longer available for new customers.
The above rates are accurate as of 8/6/2012.
Finding the Best Savings & Money Market Account Rates
You can use our rate tables to search for the best rates available nationwide and in your state: