Update 1/14/10: The money market yield has dropped from 1.06% APY to 0.61% APY (1.25% to 0.75% for $100K+). Please see this post for the rate history.
Flagstar Bank has a new internet bank website at FlagstarDirect.com. The site provides an online application for a Flagstar checking account, money market account and CDs. The money market account and CDs are the same as what I've reported previously.
The internet money market account is called Express Money Market. It was first offered in 2007 with a 5.30% APY. The rates have remained competitive. As of 11/03/09, the rate is 1.81% APY on all balances (I see both 1.82% and 1.81% on the website). Some important features listed on the FlagstarDirect.com include:
- Minimum initial deposit is $1, and no minimum balance requirement
- Free checks for life
- Free Postage-Paid Deposit Envelopes
- Visa debit card
- fee-free access to ATMs in the Flagstar, Allpoint and Presto networks in all 50 states
Money market and the checking account customers have access to an ACH bank-to-bank transfer service. Flagstar doesn't provide many details about this service in their documentation. I called Flagstar to see if there has been any changes since my last Flagstar MMA review. There continues to be a low limit on the amount you can transfer when you're logged into Flagstar online banking. According to the CSR, new customers are limited to transfers of $2K/day and $15K/month. After three months of a good record, the limits rise to $5K/day and $25K/month. To transfer more money, you probably would be better off initiating ACH transfers from another bank.
Internet Certificate of Deposit
In addition to the checking and money market accounts, FlagstarDirect.com offers certificates of deposit. Only two terms are currently listed: 3 years and 1 year. The rates as of 11/03/09 are 3.00% APY for the 3-year term and 2.01% APY for the 1-year term. A reader who emailed me about FlagstarDirect.com mentioned receiving an email from Flagstar offering an extra 0.10% on these CDs. When I asked the Flagstar rep about this yesterday, I was not able to confirm this offer is available to everyone.
Even without the bonus offer, FlagstarDirect's CD rates are competitive. However, there are a few downsides. One is the confusing early withdrawal penalty for the 3-year CD. Here's how it's described in the bank's CD page:
You will be asked to pay 180 days of interest, whether the interest is earned or unearned, or the mark to market penalty, whichever is greater.
It appears the mark to market penalty is designed to make it costly to move your money to another CD if interest rates increase. The bank's documentation also states that the early withdrawal can be made "only if we agree at the time you request the withdrawal."
A few of important details I received yesterday from the CSR include:
- CD can be funded with an ACH transfer from another bank account
- CD rate locks at the time of the application. They need to receive the funds within 10 days.
- When the CD matures, they don't have an ACH-out option. Options to receive the funds include having them mail a cashier's check or a wire transfer for a $20 fee
Flagstar Bank currently operates 175 banking centers in Michigan, Indiana and Georgia
The bank has been hit hard by mortgage problems. In August, Bloomberg reported that that Flagstar's nonperforming loans exceeded 10 percent. In the latest news Flagstar reported a third-quarter net loss of 64 cents a share. As you might expect, Bankrate.com gives Flagstar Bank its lowest rating for safety and soundness of 1 star. However, BauerFinancial gives the bank 3 stars (adequate). Both ratings are based on 6/30/09 financial data.
Flagstar Bank has been a FDIC member since 1987 (FDIC Certificate # 32541). Note, the online applications at FlagstarDirect.com go to Flagstar.com which is the website address listed at the FDIC page.
Other Competitive Savings Accounts and CDs