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3.25% 9-Month CD at Flagstar Bank - Nationally Available


Flagstar Bank
Update 2/12/09: The special 9-month CD rate has fallen to 3.00% APY.

Flagstar Bank is offering a special online CD with a yield of 3.25% APY for a 9-month term. Minimum deposit is $500. The 3.25% APY is listed in Flagstar's CD rate table as of 2/09/2009. I confirmed this for zip codes in TX, IL, CA, FL and NY. The APY is only 3.00% for zip codes in Flagstar's market area (GA, MI and IN).

In addition to the 9-month special, Flagstar has several other competitive rates for those outside their market area. These include a 2.86% APY 6-month CD, a 3.25% APY CD for terms of 12 to 14 months, a 3.40% APY 36-month CD and a 4.01% APY 48-month CD. These are listed in the CD rate table as of 2/09/2009.

I was a little confused over the rate since the front page states that this 9-month CD rate is 3.00% APY. However, I just called and confirmed that it's 3.25% APY which matches the rate listed in the rate table for those outside their market area. Also, I was told the rates are typically updated on Wednesdays around 10:00am. The rate locks when you submit the application. You have 10 days for them to receive the funds. Funding options include an ACH transfer from an account at another bank, mailing a check or transferring from another Flagstar account. At maturity, they require a letter if you want to close the CD. They don't seem to provide the option to transfer the money via ACH to an account at another bank. You can have them transfer the money into another Flagstar account. Also they can send you a cashier's check or do a wire transfer ($20 fee).

On top of the CD 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 disclosures include:
  • Automatic monthly or annual transfer of CD interest to a Flagstar account
  • 10 calendar day grace period at maturity
  • Early withdrawal penalty equals 30 days of interest for most terms under one year (there's a convoluted penalty for terms of 30 months and above)
A reader in my previous post commented that Flagstar does not allow an online 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.

Another one of Flagstar's specials is a $100 checking account bonus which appears to still be available (see post). Note, this promotion is only available at Flagstar branches (GA, MI and IN).

For those who open this CD, you may want to also open Flagstar's online Express Money Market Account. The yield is currently 3.00% APY on all balances with no minimum balance fees. It also has free checks for life. One downside is a low limit on the amount you can transfer via their ACH system (see post).

Flagstar has been hit hard by the mortgage problems. This article recently reported that Flagstar lost $200.3 million in the fourth quarter of 2008. However, it's getting new capital including $266.6 million from the U.S. Treasury's TARP program and $250 million in an equity investment. 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
If you execute a Flagstar ACH transaction on any day other than a Monday, you will lose a week's worth of interest.
A Flagstar ACH performed on Monday will not be completed until Friday - a minimum of 4 days of zero interest. Flagstar wins the prize for the worst ACH service.