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Flagstar's New Online 5.30% Money Market Account

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Flagstar Bank
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.

Rate History
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.

  Tags: money market accounts, Flagstar Bank, savings account

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Comments
61 Comments.
Comment #1 by Kevin (anonymous) posted on
Kevin
Does Zion offer free checks for life as this bank does?

1
Comment #2 by Anonymous posted on
Anonymous
The limits on ACH transfers are a pain, especially if you might need to access funds in a hurry. But, am I wrong in thinking that the easiest way around this is simply to write out a check to myself?

1
Comment #3 by Anonymous posted on
Anonymous
You might mention the tiers:
$4999.99 or less
Over $4999.99 but less than $25,000
$25,000 or more

They're the same APR at the moment but could change anytime

1
Comment #4 by Anonymous posted on
Anonymous
Rates are lower according to the website:
APY as of July 18, 2007
$0 - $24,999 4.17% 4.25%
$25,000 - $99,999 4.46% 4.55%
$100,000 - $999,999,999 4.75% 4.85%

1
Comment #5 by Banking Guy (anonymous) posted on
Banking Guy
Kevin, about Zion, only the first 10 are free. I have more on Zion here.

Anonymous 1, you are correct. If you need access to the money, you can always write out a check to yourself. That is one nice thing about an account with checks.

Anonymous 2, thanks for mentioning the tiers. As you mentioned, they may start lowering the rate on the smaller tiers sometime in the future.

Anonymous 3, those rates are for Flagstar's standard MMA rates. This new online money market is different. The only place that has the rate info and other details is page in which I link to at the top of this post.

Since this online MMA is so new, if you do open it I would definitely keep a close eye on the account to make sure it's earning the right interest.

1
Comment #6 by Anonymous posted on
Anonymous
They updated their website. I didn't see the new "Express Money Market - Promo" chart when I checked yesterday. Previously, the "Express Money Market" rate chart was the only table given.

1
Comment #7 by Anonymous posted on
Anonymous
I applied for this account online and they emailed me requesting "Additional proof of identity." They got my driver's license info online already. Now they need a birth certificate, car registration, pay stub, utility bill, Company ID, insurance or voter card, student enrollment info or credit card info.

This process seems cumbersome, but they say "please don't be alarmed, this is protocol."

1
Comment #8 by Terry (anonymous) posted on
Terry
I have a checking account with my local credit union that I use for paying bills and online purchases only. I never keep much money in it because it doesn't pay interest. This may be a good alternative to that, especially without having to do direct deposits and 10 debits a month like some of the other high interest checking accounts. A little interest is better than nothing...

1
Comment #9 by Anonymous posted on
Anonymous
This money market promo is at: http://www.flagstar.com/moneymarket.jsp

1
Comment #10 by Anonymous posted on
Anonymous
I just checked bankrate this morning and saw this money market account, with a high APY.
I just opened a savings account with Emigrant and am wishing Flagstar had this account last week!!!

1
Comment #11 by Anonymous posted on
Anonymous
Does anyone know what Flagstar's rate history is like? Are they likely to keep a competitive rate once they've reached their "new money quota"?

1
Comment #12 by Banking Guy (anonymous) posted on
Banking Guy
Since this is a new online account from Flagstar, it's hard to say how they will handle this account based on its non-internet history. As mentioned by one of the commenters, since they do list 3 tiers, I wouldn't be surprised if the 5.30% APY eventually only applies to a large balance like $25K.

1
Comment #13 by Anonymous posted on
Anonymous
The email I received from Flagstar confirming my Express Money Market online application says "your first order of checks for free"
So not free checks for life.

1
Comment #14 by Banking Guy (anonymous) posted on
Banking Guy
Thanks. Their Learn More page states "Free Checks for Life", but seems like banks often have wrong info on free checks. Salem Five Direct also had this listed wrong when they first launched.

1
Comment #15 by Anonymous posted on
Anonymous
I find this interesting. In their section about former customers: "...will remove any information from our files within a reasonable period of time."

What I've mostly come across bank and former customers is that they won't share, "except as," but Flagstar says they'll remove it eventually.

1
Comment #16 by Anonymous posted on
Anonymous
Yeah, from their privacy policy, it sounds like Flagstar will remove information about their former customers. I kind of like that. It's one fewer place where someone's private information exists (should there be an unfortunate breach in security).

Other banks' privacy policies seem to infer that they'll keep the information about former customers and possibly share it. Some don't even mention former customers.

1
Comment #17 by Anonymous posted on
Anonymous
bill pay? do any of the high yield online checking accounts offer free bill pay?

1
Comment #18 by Banking Guy (anonymous) posted on
Banking Guy
Money market accounts like this often don't have bill pay. Please see my post on the best checking accounts. Most of these offer free bill pay.

1
Comment #19 by Anonymous posted on
Anonymous
I sent in the paperwork to open an account and Flagstar did a hard credit pull through TransUnion.

1
Comment #20 by Anonymous posted on
Anonymous
According to http://www.flagstar.com/banking/moneymarket/landing_page2.jsp, the account has bill pay (see under "Free online banking")

1
Comment #21 by Anonymous posted on
Anonymous
I opened up this account and got 150 checks to start. These should last a while, even if not for my lifetime.

1
Comment #22 by Anonymous posted on
Anonymous
Are you sure the APY is accurate? It says 4.25 on the website. In the fine print at the bottom it says that APY is accurate as of 6/17/07 and subject to change without notice. Both links for the applications take you to the same thing. Which leads me to believe that the 5.3 APY is not accurate.

1
Comment #23 by Banking Guy (anonymous) posted on
Banking Guy
Where do you see the 4.25%? The 5.30% APY is still listed here.

Note, this money market account is different than the standard money market accounts offered at Flagstar's brick-and-mortar branches.

1
Comment #24 by Anonymous posted on
Anonymous
I found it on the main website, flagstar.com, under Money Market. Its still a better APY then most savings but its not 5.3. Oh, and I know what your link is, but I'll let the rest of you figure that out on your own.

1
Comment #25 by Anonymous posted on
Anonymous
Anyone know the ACH transfer delay for this one? Is it fast like GMAC or painfully slow like CapitalOne? I will be transferring within a week, so if nobody posts before then I will let you know my experience.

1
Comment #26 by Anonymous posted on
Anonymous
Further clarification on ACH transfer limits. Upon signing up, I received an email with the following:

You can choose any one of the following service types to meet your online money movement needs: Premium to transfer funds (up to $2000 daily limit, $5000 monthly limit) within the next business day.
Standard to Transfer Funds (up to $15000 Daily Limit, $25000 Monthly Limit) within 3 Business Days
Pay People to pay any third party (up to $500 daily limit, $1000 monthly limit).

Hope this helps

1
Comment #27 by Banking Guy (anonymous) posted on
Banking Guy
Thanks for the clarifications! I've updated the post with this info.

1
Comment #28 by Anonymous posted on
Anonymous
I think the Flagstar promo of 5.3 is only available to the areas that don't have branches. I'm from Michigan (Flagstar is a MI bank) and it gave me 4.2% and didn't show the promo. I typed in a Texas zip code and it showed the promo of 5.3%. Maybe I should goto the branch and ask them about it.

1
Comment #29 by Anonymous posted on
Anonymous
it dropped to 5.00%

1
Comment #30 by Anonymous posted on
Anonymous
Rate has dropped to 4.80% APY

1
Comment #31 by Anonymous posted on
Anonymous
Rate is now 4.65%

1
Comment #32 by Anonymous posted on
Anonymous
Rate is now 4.40%

1
Comment #33 by Matt Rogers (anonymous) posted on
Matt Rogers
Confirmed, rate dropped to 4.40% APY.

1
Comment #34 by Anonymous posted on
Anonymous
Fell from 4.65% to 4.40% in one week and in the next week fell again to 4.25%!. I wonder if its going to continue on this course of falling every week! Its falling faster than a thermometer in antarctica.

1
Comment #35 by Anonymous posted on
Anonymous
I bet its going to eventually work its way down to the different yields using their 3 tiers. If it keeps going down at its current pace, it won't be long.

1
Comment #36 by Matt Rogers (anonymous) posted on
Matt Rogers
I just moved all but $500 from Flagstar into CountryWide and my rate fell to 2.50% APY!

1
Comment #37 by Anonymous posted on
Anonymous
Matt,

Thats a bummer. You should still be able to obtain the same rate as whats posted at their website(currently 4.25%)

1
Comment #38 by Matt Rogers (anonymous) posted on
Matt Rogers
Hmm, seems there was an error with the online banking website reporting a lower APY at first but it has adjusted back to 4.25% APY. Whew!

1
Comment #39 by Anonymous posted on
Anonymous
Matt...

You must have been looking at the regular MMA at their website. Now here is a disturbing sentence in the FUNDS TRANSFER AGREEMENT, in the section titled INFORMATION AUTHORIZATION, the last paragraph states: "We may also verify accounts through requiring the entry of information you ordinarily use to access the account providers website"

So to me this means if you have accounts at say CountryWide and want to set it up to do FUNDS TRANSFER between Flagstar and CountryWide, you'd HAVE TO GIVE THEM YOUR USER NAME AND PASSWORD that you use to login to COUNTRYWIDE if they ask for it!

Is that how others see this too? Has anyone setup FUNDS TRANSFER and been asked this information?

1
Comment #40 by Matt Rogers (anonymous) posted on
Matt Rogers
Anon,
When I log into the Flagstar Online Banking website it states my current APR/APY and that is where it temporary stated the lower rate.
I don't remember when I set up all my external linked accounts with Flagstar, but I do remember one bank (CapitalOne?) that required login info to other bank to set them up (optional).

1
Comment #41 by ProfessorB (anonymous) posted on
ProfessorB
What's Flagstar's fee for premium ACH transfers?

1
Comment #42 by Anonymous posted on
Anonymous
I just got set up with this account and the fee for premium ACH transfers is $0 as far as I can tell. However, according to their online help files, you do need to meet certain conditions before you can use the premium ACH service, such as being a funds transfer user for 3 months and having a balance of $750 in your account.

1
Comment #43 by Anonymous posted on
Anonymous
I have had my eye on this account for a while, but I have a few questions about it.

First, when I clicked through to the application, then clicked on the "Money Market" tab, I got two tables of rates: "Express Money Market - Promo" which had the advertised 4.25% rate, and then "Express Money Market", which had ~2.5% rates.

So, I emailed customer service and asked "Is this just a promo rate?" to which they replied:

Yes the promotion is an introductory rate, the money market account is a liquid account meaning the rate is not locked in. The rate on the Money Market can fluctuate and the rates are scheduled to change on every Wednesday.

This is sort of an ambiguous reply... so I will ask those of you who have had the account for 6 or so months - does the rate remain high, or does it drop down after a few months? And do the other claims hold (free checks for life, postage-paid envelopes, etc.)?

I don't want to go through all the trouble if somehow there is something that doesn't meet the eye (like the rates dropping big-time, or the bank failing...).

Thanks for any advice!

1
Comment #44 by David (anonymous) posted on
David
Rate has dropped to 4.00%

1
Comment #45 by Anonymous posted on
Anonymous
Rate is now 3.90%

1
Comment #46 by Anonymous posted on
Anonymous
How safe is Flagstar? I heard it is only rated 1 star.

1
Comment #47 by Anonymous posted on
Anonymous
To anon above, I've heard the situation is pretty dire... The Bank Deals guy posted earlier this month that Flagstar has suspended dividends (I assume to shareholders?), and they were hit hard by the subprime lending crisis.

I'm in the same boat as you... I really like the features of this account (especially the free checks), but I don't want to open this account, only to have it turn around and close on me.

Plus, I can't help but feel that my opening the account will only cost them money, b/c I keep relatively small balances in my savings accounts (hey, I'm a college student!).

1
Comment #48 by Anonymous posted on
Anonymous
I called the bank today and a voicemail recording said that they were unable to process all of the branch transactions from last Saturday. This is making me nervous.

1
Comment #49 by Anonymous posted on
Anonymous
Rate down to 3.65%

1
Comment #50 by Anonymous posted on
Anonymous
3.6% rate and 3.660 APY

1
Comment #51 by Anonymous posted on
Anonymous
I am not sure if this is a change in policy by Flagstar or if it has always been like this.

I tried signing up for the MMA last night... and succeeded (no login yet). However, when I looking at something this morning, I realized that the 3.65% was not being offered for my zip (30040 - Cumming, Georgia).

Was this an "location-specific" offer? (Knowing that the original post is over 10 months old)

1
Comment #52 by Anonymous posted on
Anonymous
Rate is 3.510% APY now.

1
Comment #53 by Anonymous posted on
Anonymous
try to open this account over the phone and not online, i got two transunion hard pulls (one on day of app) and one 4 days later.

1
Comment #54 by Anonymous posted on
Anonymous
Re:
Flagstar Express MMA Promo
Any idea what the "promo" means? Is is a limited or guaranteed time period for that rate?

1
Comment #55 by Anonymous posted on
Anonymous
Any update on the safety of this bank?

1
Comment #56 by Anonymous posted on
Anonymous
down to 2.75%

1
Comment #57 by Anonymous posted on
Anonymous
Down to 1.90% APY today.

1
Comment #58 by Anonymous posted on
Anonymous
Still curious to if the "promo" offer expires

1
Comment #59 by Anonymous posted on
Anonymous
I have faxed all the necessary papers 3 weeks ago, to buy a Certificate of Deposit. To this date, there has been NO action on my requist. Called the Bank and was told my account information has been lost or misplaced.I have NO tolerance with this incompetence,especially with such a large sum of money. Be careful with their online business ethics.

1
Comment #60 by Anonymous posted on
Anonymous
Site shows Money Market rate at 1.09% APY, although my existing account still shows 1.60% APY.

1
Comment #61 by David (anonymous) posted on
David
According to the chart, soon we will have to pay the bank to keep our money on deposit.

1