Dedicated to Deposits: Deals, Data, and Discussion

State Farm Bank Continues to Offer a Competitive Regular Checking Account

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State Farm Bank
Update 10/03/09: The rate has fallen from 1.55% to 1.45% APY.

State Farm Bank continues to offer a competitive rate on its Interest Checking Account. As of 8/18/09, the rate is 1.55% APY for balances of $2,500 and over (0% for under), and it has remained at this rate for a while. I first reported on it back in March. According to the CSR, deposit rate changes are typically made on Wednesday mornings. Hopefully this post won't jinx the rate. Some important account features include:
  • $100 minimum opening deposit
  • $500 minimum to avoid monthly fee
  • Monthly fee is waived if account receives monthly direct deposit (see State Farm's fees page)
  • Rebates ATM surcharges for accounts that have direct deposit or ACH credits (see State Farm's fees page)
  • Initial package of 50 blue Specialty checks free
  • Free online bill payment
  • Postage paid envelopes and free overnight deposits of $100 or more
  • Online ACH bank-to-bank transfer service
State Farm Bank has an ACH transfer bank-to-bank transfer service. According to the CSR, this service has been in operation just over a year. You can create a link to your external account online. The system uses trial deposits to verify that you own the external account. The CSR didn't know the limit on the number of links that it allows, but there didn't seem to be any small limit. The main issue with the service seems to be the amount of the allowed transfer. According to the CSR, the limit is $5,000 per transfer. However, the CSR said there were no limits to the number of transfers for the checking account.

Reviews

A reader commented in a previous post that there have been reports that State Farm Bank does a high number of hard credit inquiries when opening accounts. The hard credit inquiry can temporarily ding your credit score. The CSR wasn't able to confirm this, but it sounded like at least one hard credit pull is likely.

A reader provided a detailed review of his experience with State Farm Bank in one of my previous State Farm posts. On State Farm's online account interface, he mentioned that " the bank is geared more for the smaller scale, put your money all in one place type of person; the more savy customers like BankDeals readers will find it 'old fashioned'." He noted that they don't have a long history of competitive rates: "their rates were not competitive until recently, so this may be temporary cash crunch promotions." Some of his observations on customer service include:
phone customer service is about as friendly as you can get, but that doesn't mean the best.
...
using an agent to do banking is almost laughable as most don't want to bother with it or have a clue, they don't make money. so if you need a branch like feeling with knowledgable bank people, and services, this is a no go.

Other State Farm Bank Products

State Farm Bank also has a fairly competitive money market account. It's a tiered rate account with the top rate of 1.90% APY for balances of $100K and above as of 8/18/09. It has limited check writing, and the checks are free.

State Farm Bank also has the occasional deal on CDs. The last one was a 28-month CD special with a rate that was as high as 3% APY in June. Currently, none of the CD rates are that competitive.

FDIC/Financial Info

State Farm Bank's ratings for safety and soundness are fair: 3 stars (adequate) at BauerFinancial and 3 stars (performing) at Bankrate.com. Both ratings are based on 3/31/09 financial data. State Farm Bank has been a FDIC member since 1999 (FDIC Certificate # 34617).

Other Competitive Checking Accounts

If you want significantly higher interest rate on a checking account, your best option is a reward checking account (see website). If you don't want the hassles of debit card usage requirements and balance caps, this State Farm Bank checking account is competitive. As a comparision, Charles Schwab Checking pays only 0.75% and ING Direct Electric Orange only pays 0.25% for balances under $50K. Other good choices for non-reward checking accounts with competitive rates include Alliant Credit Union (see post) and Clear Sky Accounts (see post).

For other high-yield checking and savings accounts, refer to my weekly rate summary.

  Tags: State Farm Bank, checking account

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Comments
5 Comments.
Comment #1 by walt (anonymous) posted on
walt
My Coulee http://www.couleebank.net/ checking account is still paying 4% on up to $25k. Only drawback: no free printed checks.

1
Comment #2 by walt (anonymous) posted on
walt
I just followed your Clear Sky link, and I don't see why you have highlighted them here. Better to look at the big list and look for *.

1
Comment #3 by Banking Guy (anonymous) posted on
Banking Guy
Clear Sky and Alliant are both decent non-reward checking options. Reward checking accounts may not be for everyone.

Also note, there's a nationally available list at highyieldcheckingdeals.com.

1
Comment #4 by Anonymous posted on
Anonymous
What is this in their Ts & Cs?

Withdrawals. We have the right to require seven (7) days prior written notice from you of your intent to withdraw any funds from your account. Withdrawals may be subject to a service charge.

7day notice in order to withdrawal and subject to a service fee? That's ridiculous...

1
Comment #5 by Anonymous posted on
Anonymous
Another CSR from SFB. We do offer EFT, and as far as I know, there isn't any limit to the amount of accounts it can link. The limit for EFT's is 25,000.00 per transaction online and larger with a representative.

We do have big things coming for our online presence, as we do a big overhaul of our system to be more competitive. Look for it in November!

We do pride ourselves on our customer service, so thank you to the commenter that left that part. Our hours on weekdays end at 11 CST (8 on weekends), with some functions that can be handled through insurance CSR.

1