State Farm Bank's 3-month 4.25% CD

State Farm Bank is offering a 3-month CD with a rate of 4.25% APY. The minimum required deposit is only $500. The rate goes up to 4.35% APY for deposits over $100K. This seems a little unusual for State Farm Bank which hasn't been known for competitive CDs. Currently, its 6-month CD rate is only 3.66% APY and its 1-year CD rate is only 4.00% APY.

This new State Farm 3-month CD is way above the other 3-month CD leaders. IndyMac Bank offers 4% with a $5K minimum and Everbank offers 3.97% with a $1.5K minimum. With EmigrantDirect offering 4% on its savings account, I don't see much advantage unless you can get a rate like what State Farm is offering.

You can apply for the State Farm CD online, however, it requires you to print out and mail the application. The webpage states that you can fund a CD using ACH electronic transfers. You can also apply through a State Farm agent.