We've seen a number of banks enter the direct banking business, primarily through high-rate savings products. Late last year, Sunmark Federal Credit Union <sunmarkfcu.org> joined the fray with a private-branded direct Web offering at RateEdge.com (click on screenshot below for a closeup).

The Internet-only savings account pays 5.25% interest on all balance levels with no fees and no minimum balance. Rates are five times higher than the credit union's regular share account, which pays 1% on balances of $5000 or more. The credit union's money market pays 2% on a $25,000 balance.

The only possible fee is for transferring money OUT of the account more than twice in a month. The third and subsequent withdrawals are charged a fee ranging from $2 to $5 per transfer depending on the amount. Refer to its fee schedule for more information.

This would be the best savings account in the country, except that it is limited to residents of six counties in upstate New York (Albany, Montgomery, Rensselaer, Saratoga, Schenectady and Schoharie). However, anyone in the country can open an account if they have a relative in any of those counties, or at least claim* they do.

*The application asks for the name of the relative living in the six-county area, but no other identifying information. According to an online posting, the credit union's customer service department requires the address and phone number of the relative prior to opening the account. We did not test it ourselves.