Dedicated to Deposits: Deals, Data, and Discussion

5.10% 48-Month Online CD at Flagstar Bank


Flagstar Bank
Flagstar Bank is offering an Online CD with a yield of 5.10% APY for a 48-month term. Its 12-month CD is fairly competitive with a yield of 4.25% APY. The minimum deposit is $500. There's an online application that allows ACH funding the CD from your checking or savings account at another institution.

On top of the rate table, there are three tabs. The right one is the disclosure for the CD. At the bottom of this page is a link to the PDF of the full disclosure. Some of the important details from the disclosure include:
  • Automatic monthly or annual transfer of CD interest to a Flagstar account. CSR said that mailing a check is also an option.
  • At maturity you can elect to withdraw the funds via a wire transfer ($20 fee) or by check
  • 10 calendar day grace period at maturity
  • Early withdrawal penalty is 180 days of interest for terms from 12 to 29 months. For 30 months and above, the early withdrawal penalty is at least 180 days of interest. It can be more based on what they call the mark to market penalty which seems quite convoluted.
For those who open this CD, you may want to also open Flagstar's online Express Money Market Account (see post). The yield is currently 3.65% APY on all balances with no minimum balance fees. It also has free checks for life.

Flagstar has been hit hard by the mortgage problems. However, its financial ratings have recently improved. Bankrate just released ratings based on 6/30/08 data, and Flagstar's rating has improved from 1-star to 2-star (below peer group). BauerFinancial gives Flagstar 3 stars (adequate) based on 6/30/08 data. Flagstar did have some positive news on its second quarter results (see article). As I recommend with any bank, make sure to stay under the FDIC limits. The bank is a member FDIC (FDIC Certificate # 32541).

  Tags: Flagstar Bank, CD rates

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Comment #1 by Anonymous posted on
Flagstar does not allow an on-line IRA. If you want to set up an IRA CD, you must go into a branch. An IRA cannot be set up via phone or mail, only a branch visit.

Comment #2 by Anonymous posted on
When you go to their site, you have to put in your zip code. For my zip code (30101 in GA), the APY for the 48 month CD is 4.89%. Then, to see what happens, I tried zipcodes I am familiar with in FL and NY, and the APY is 5.10% there. So obviously, they are offering the 5.10% in some states but not all.

Comment #3 by Anonymous posted on
Continuing from my last posting, in GA the 12 month is 3.59%, not the 4.25 in other areas.

Comment #4 by Jeff (anonymous) posted on
5.10% available in Arizona.

Comment #5 by Anonymous posted on
After opening accounts with Flagstar, I have to admit that this bank's ACH transfer facility sucks. It has a daily transfer limit of only $2,000 (combined in and out!). What's more, After making an incoming transfer of $2k on 9/19, I "successfully" scheduled $2k for 9/22 and $2k for 9/23, thinking I've been doing so good in complying with Flagstar's lousy antiquated limits. Then I received email from the bank telling me both transfers had been canceled due to "over-limit condition"! These unexpected cancellations have caused me so much trouble in my overall funding positions, and I regret ever opening accounts with this lousy bank. This is the second bank that ever gave me trouble of this kind. The first one was Apple Bank. I have since banished Apple Bank from my list of bankers, and I will close my accounts with lousy Flagstar as well.

Comment #6 by Anonymous posted on
Avoid FLAGSTAR bank. The early withdrawal penalty is not even specified for >30mo like the 3 year. I have never seen a "Mark to market penalty" before, and they do not disclose how they calculate it. So they can create any rule they want to steal your money legally!!!