When UFB Direct raised its money market account yield to 1.30% on August 6th, I was hoping it would last for a few months. Unfortunately, it lasted less than a month. Yesterday, UFB Direct cut the money market account APY to 1.10% (Hat tip to the reader who posted this news in the forum).
UFB Direct, a division of BofI Federal Bank, introduced this money market account in May. When it was first introduced in May, the yield was 1.15%. It was increased to 1.25% in June. The account details and the current rates are listed in the money market section of UFB Direct.
This money market yield of 1.10% is still a rate leader for a non-promo rate that's available for new and existing customers. However, I'm worried that this rate cut may not be the last. UFB Direct's savings account had a 1.30% APY for its first 6 months. It then fell to 1.10% APY in January. It was followed by a bunch of small rate cuts in February until the rate bottomed out at 0.80%.
If you're looking for a savings account rate leader that will be a rate leader for the long run, it's not easy. I reviewed the rate history of a few of the current rate leaders in this post.
If you want a savings account rate leader, you should probably expect to switch banks at least twice a year.
Another option is to use one or more reward checking accounts, but reward checking rates have also fallen over the last few years. Falling reward checking balance caps is also an issue. For example, that initial yield of 3% for up to $25K may now be down to 2% for up to only $10K.
Bank of Internet USA, another division of BofI Federal Bank, continues to offer 1.25% APY on its Rewards Checking account. This rate has held since July 2011. This rate is low compared to other reward checking accounts, but it applies to all balances (there's no balance cap). Now that the rate is higher than any non-promo savings account rate, this rewards checking account is looking more appealing. My last review of this account was on its one-year anniversary.
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