UFB Direct did something quite dramatic today. It raised its savings account rate from 0.20% to 1.25% APY. The 1.25% APY applies to balances of at least $25,000. The rate remains at 0.20% for balances below $25,000.
UFB Direct and this savings account are just over three years old. They were launched in August 2011 by BofI Federal Bank. UFB Direct’s focus has been on airline rewards. However, UFB Direct has occasionally offered very competitive interest rates. Those competitive rates ended dramatically on April 2013 when UFB Direct’s money market and savings account rates plummeted from 0.80% to 0.20%.
|1.00*%||$25k||-||UFB Direct||UFB Savings (New Money)|
|OTHER TIERS: 0.20% → Up to $25k|
Based on UFB Direct’s history, you have to wonder how long this new rate will last. However, I think it’s likely that it’ll last for several months which makes this a better deal than any short-term CD. Below is the rate history of UFB Direct’s savings and money market accounts. The rate history can give us some ideas about how rates may change in the future.
UFB Direct Savings Rate History
- 08/04/11 - 1.30% APY (launch)
- 01/18/12 - 1.10% APY (~6 mo from launch)
- 02/01/12 - 1.05% APY
- 02/07/12 - 0.95% APY
- 02/13/12 - 0.90% APY
- 02/22/12 - 0.85% APY
- 02/28/12 - 0.80% APY (~7 mo from launch)
- 04/23/13 - 0.20% APY (~21 mo from launch)
- 10/09/14 - 1.25% APY
UFB Direct Money Market Rate History
- 05/30/12 - 1.15% APY (launch)
- 07/14/12 - 1.25% APY
- 08/06/12 - 1.30% APY
- 09/04/12 - 1.10% APY (~3 mo from launch)
- 10/10/12 - 1.05% APY
- 10/29/12 - 0.95% APY (~5 mo from launch)
- 11/19/12 - 0.80% APY (~6 mo from launch)
- 04/23/13 - 0.20% APY(~11 mo from launch)
UFB Savings Account Features
One thing to note is that this UFB Savings Account is a little different than the previous Airline Rewards Savings Account. First, the old savings account didn’t have a rate tier like this one. Also, you used to be able to earn airline miles/points. If you like earning airline miles/points, you’ll have to open UFB Direct’s Airline Rewards Checking account.
Below is a list of the noteworthy features of the UFB Savings Account:
- Minimum deposit to open an account is $100.
- No minimum balance requirement and no monthly maintenance fee.
- No online banking external funds transfer (see below)
- Online banking and mobile banking that allows you to deposit checks via desktop PC or mobile phone
The lack of an external funds transfer service is not ideal. However, there’s an easy solution for those who already have an internet bank with an ACH transfer service. You can initiate the ACH transfer from your other bank. You can also transfer money from your UFB Savings account to your UFB Rewards Checking account. The checking account offers free external transfers.
At the UFB Direct savings account page, click the "open account" link. One of the options to fund the account is by credit or debit card. However, I was told the funding limit using your card is only $100, and it’ll be coded as a cash deposit which would be considered a cash advance rather than a purchase by your credit card company. A better funding option is an ACH transfer from your current bank checking or savings account. I was told the ACH funding option is limited to $25,000. You can also mail in a check or wire funds from another institution.
UFB Direct Overview
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 BofI Federal Bank (formerly called Bank of Internet USA). Thus, deposits that you make to UFB Direct will be held by BofI Federal Bank. 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.. BofI Federal Bank has an overall health grade at DepositAccounts.com of an "A" with a Texas Ratio of 5.16% (excellent) based on June 2014 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).