Update 1/13/10: The yield has dropped from 1.06% APY to 0.61% APY (1.25% to 0.75% for $100K+). Please see below for the rate history.
Update 11/02/09: Flagstar has a new internet bank website at FlagstarDirect.com..
Flagstar just started a new online money market account called the Express Money Market Account. It offers a 5.30% APY on all balances with no monthly fees or minimum balance requirements. The main feature that sets this apart from most other online savings accounts is the check writing with free checks for life. So it's in the same league as what is offered by GMAC Bank (see post) or by Zions Bank (see post). Some advantages over what GMAC offers includes no minimum balances (GMAC has a $500 minimum) and free checks for life (GMAC just provides the first 50 free). There are similar advantages over Zions' money market account. Another close competitor is Capital One's High Yield Money Market, but the current yield on this is only 4.75% APY (see post).
The main disadvantage when compared to GMAC is Flagstar's ACH transfer service. I was told by the customer service that Flagstar limits inbound and outbound transfers to $5K per month and $2K per day. So for those who plan to put large balances in this, you'll want to link this with your other online accounts and initiate transfers from those accounts. I was told they wouldn't block such ACH transfers.
Below are the main features of Flagstar's Express Money Market Account from the Flagstar's learn-more page and from my conversation with the customer service rep. The features told to me by the customer service rep are labeled with CSR. If you notice other important features or find discrepancies, please mention them in the comments.
- No minimum balance or fees
- Free checks for life
- Limit of 3 checks per month and a total of 6 non-ATM withdrawals (per federal law)
- Visa Debit Card
- Free ATM usage at Allpoint and certain Presto! ATMs. No fee reimbursements on other ATMs.
- Online statement only
- Free postage-paid deposits envelopes
- Account can be funded by free wire transfer or by check
- Wire transfers after initial one costs $10 for inbound, $20 for outbound (CSR)
- After you complete the online application, you must send in a signature card (CSR)
- They allow beneficiaries on the account (write them on signature card if it's not in application) (CSR)
- ACH system for making transfers to and from other banks available after account is established (CSR)
- ACH transfers are free with up to 5 linked bank accounts allowed (Update 11/12/09: 5 limit is based on CSR. Used to be unlimited)
- Limit of $5K/month and $2K/day on next-day Premium ACH transfers initiated at Flagstar, Limit of $25K/month and $15K/day on 3-day Standard ACH transfers (Update 11/12/09: Limited during first 90 days to $5K/mo and $2K/day according to CSR)
- No blocks or dollar limits on ACH transfer initiated at other banks ( CSR)
- Update 6/14/09: Reader has reported that the speed of the ACH transfers are slow. If you don't submit the transfer request on Monday, it'll drag out over the weekend and you're lose 4 to 7 days of interest during the transfer
- Transunion is used in application. CSR was not sure if it's hard or soft pull. Update 6/1/08: A reader has reported that there were 2 hard pulls in the application.
The ACH transfer limits are a big downside, but for those who intend to maintain relatively small balances it may be worth it for the free checks and the lack of minimum balance requirements. Capital One comes close on features, but not on the yield. Of course we'll have to wait and see if Flagstar's rates will remain competitive. Another potential competitor is Salem Five Direct's eOne checking account which offers unlimited check writing, but it has a lower rate for small deposits (5% APY) and no free checks for life (see post).
Flagstar currently operates banking centers in Michigan, Indiana and Georgia. Like many other regional banks, Flagstar seems intent to be a national player in the online banking market. I noticed a few weeks ago that they've been offering CDs online. They currently have a competitive rate of 5.40% APY on a 1-year CD (CD product page).
One little thing I appreciate is that Flagstar created the website for this new online money market account under their official domain name www.flagstar.com so there's no question about its legitimacy. The URL www.flagstar.com is listed at the FDIC's Flagstar page.
Edit 6/14/09: Added info on ACH speeds based on reader's comments.
Edit 9/22/07: Updated ACH transfer limits based on reader's comments.
01/13/10: Rates have dropped: 0.61% APY up to $100K; 0.75% APY over $100K
01/09/10: Rate has increased from 0.50% to 1.06% APY, Added a rate tier: 1.25% APY $100K+
12/16/09: Rate has dropped from 1.09% to 0.50% APY
12/08/09: Rate has dropped from 1.60% to 1.09% APY
12/05/09: Rate has dropped from 1.70% to 1.60% APY
11/28/09: Rate has dropped from 1.80% to 1.70% APY
07/22/09: Rate has dropped from 1.90% to 1.81% APY
06/13/09: Rate has dropped from 1.91% to 1.90% APY
06/10/09: Rate has dropped from 2.00% to 1.91% APY
06/04/09: Rate has dropped from 2.20% to 2.00% APY
05/01/09: Rate has dropped from 2.30% to 2.20% APY
04/10/09: Rate has dropped from 2.41% to 2.30% APY
03/14/09: Rate has dropped from 2.65% to 2.40% APY
02/28/09: Rate has dropped from 2.75% to 2.65% APY
02/21/09: Rate has dropped from 3.00% to 2.75% APY
01/16/09: Rate has dropped from 3.55% to 3.00% APY.
07/25/08: Rate has gone up from 3.50% to 3.66% APY
06/01/08: Rate has dropped from 3.65% to 3.50% APY.
03/20/08: Rate has dropped from 3.90% to 3.65% APY.
03/20/08: Rate has dropped from 4.00% to 3.90% APY.
03/13/08: Rate has dropped from 4.25% to 4.00% APY.
02/07/08: Rate has dropped from 4.40% to 4.25% APY.
01/27/08: Rate has dropped to 4.65% APY.
09/28/07: Rate has dropped to 5.10% APY.