National Australia Bank subsidiary UBank has cut its deposit rates by 25 basis points. It seems a strange move, given all the industry talk about how hard banks are competing for deposits and loans, but UBank is not alone - 21 institutions have cut deposit rates this year.According to data from Infochoice.com.au, on Monday UBank cut the bonus rate on its USaver account from 4.26 per cent to 4.01 per cent and the base rate from 3.56 per cent to 3.31 per cent (customers are eligible for the bonus rate if they deposit a minimum of $200 a month into the account via an automatic savings plan).UBank cut the bonus rate on its USaver Ultra account from 4.62 per cent to 4.37 per cent and the base rate from 3.56 per cent to 3.31 per cent (customers are eligible for the bonus rate of they deposit a minimum of $2000 a month).Infochoice figures show that the 21 institutions that have cut bonus rates on online and high-interest savings accounts this year have cut by an average of 12 bps.They include ANZ, Bank of Melbourne, Bank of Queensland, BankSA, Citibank, HSBC, IMB, NAB, Newcastle Permanent, People's Choice Credit Union, Qantas Credit Union, RaboDirect, St George Bank and Westpac.Nine institutions cut their base rates, with the average cut being seven bps.Another reason the move to cut deposit rates seems strange is that banks' cost of funds fell over the past year. The March Reserve Bank Bulletin reported that "relative to the cash rate, the major banks' funding costs are estimated to have declined by about 11 basis points over the year."However, the RBA said that funding costs relative to the cash rate continue to remain significantly higher than pre-financial crisis levels. Major banks' funding costs are close to 130 bps higher than prior to the financial crisis.Last week Canstar issued its latest deposit account star ratings. It gave five stars to 15 online saver accounts, including ING Direct's Savings Maximiser, UBank's Usaver, AMP Bank's Saver Account, ME Bank's Online Savings Account and Citibank's Online Saver.