State Farm Bank Adds 20 Basis Points To 60-Month CD


Update: This offer has expired. Please refer to the State Farm Bank page for the latest rates and offers.

Deal Summary: 60-month CD, 2.30% APY, $500 minimum deposit

Availability: Nationwide (internet bank)

In early December, the good news was that State Farm Bank had raised the rate on its 60-month CD by 30 basis points. The good news continued this week with an additional 20 basis points being added, resulting in a 2.30% APY, the highest APY for the 60-month CD since July 2011.

The minimum deposit to open any State Farm Bank CD is $500, and while State Farm Bank’s website lists two balance level tiers (up to $100K and $100K+), the above APY applies to both tiers.

The 60-month CD is available as an IRA (Traditional, Roth, and CESA), earning the same APY with the same funding requirements. More detail on these CDs is available on the Bank’s rate page. Entering your zip code is required to view the rates, but the previously mentioned APY applies to all zip codes.

As stated on State Farm Bank’s Truth in Savings Disclosure page, the Early Withdrawal Penalty reads (in part) as follows:

There is a minimum of $25 penalty or the following,

    Penalty equal to 545 days' interest (earned or not) on the
    principal withdrawn for a CD Term of 48 months or greater


Headquartered in Bloomington, Illinois, State Farm Bank offers accounts nationwide through the internet, by phone, and through individual State Farm agents. Anyone with a valid Social Security Number (SSN), Tax Identification Number (TIN) or Individual Taxpayer Number (ITN) can open an account with State Farm Bank.

State Farm Bank was established in 1999 as a separate entity, distinct from the ubiquitous State Farm insurance brand, and is currently the 78th largest bank in the country with assets in excess of $16.8 billion.

Opening a CD with State Farm Bank can be opened online, by phone, or by visiting a State Farm agent. If you chose to open the CD through a State Farm agent, please note that beyond opening the CD, the individual agent has no fiduciary responsibility and you must manage your account online or by phone.

I have written in the past in greater detail about State Farm Bank's CDs/IRAs, but one feature bears repeating:

Normal distributions will be allowed on IRAs without incurring
an early withdrawal penalty for customers who have reach age 59½.
Transfers or rollovers to another IRA are not considered normal distributions.

This is significant, since many banks do not waive early withdrawal penalties for this type of distribution.

Bank Overview

State Farm Bank has an overall health grade of "A" at, with a Texas Ratio of 5.68% (excellent) as of September 30, 2016. In the past year, State Farm Bank increased its total non-brokered deposits by $36.22 million, an above average annual growth rate of 0.34%. Please refer to our financial overview of State Farm Bank (FDIC Certificate #34617) for more details.

How the CD Compares

When compared to the 165 similar length-of-term CDs tracked by that require a similar deposit and are available nationally, State Farm Bank’s 60-month CD APY currently ranks second.

The above rates are accurate as of 2/10/2017.

To look for the best nationwide CD rates and the best CD rates in your state, please refer to our CD rates table or our Rates Map page.

  |     |   Comment #1
For folks contemplating a custodian-to-custodian IRA CD transfer, one nice thing about StateFarmBank is the rate-lock. Unlike many financial institutions, State Farm will "lock" the rate when you apply (as opposed to when funds "hit"). If you have a friendly State Farm agent (as do I), the agent will attend to all the paperwork and provide you with a confirmation of the rate-lock.

For folks over (or nearing) the age of 59 1/2, with IRA CDs, the perquisite Ken noted (no EWP for partial withdrawals) is important. While I would never suggest a person should "game" the system, the language quoted by Ken has a huge loophole. Having conducted two "normal distributions" with State Farm, here's how it works. You fill out a form, checking normal distribution. In a week to ten days, you get a check. Then, you have 60 days to figure out if you want to re-invest in a better IRA CD, or not. The IRS now limits you to one such transaction per 365 days. Stated another way, partial withdrawals for "direct" transfer/rollover don't qualify, but "indirect" (i.e., check to you) are perfectly fine. Just remember, one permitted every 365 days.
  |     |   Comment #2
Nice that a bank is offering a top rate. I like CUa but I don't like that you have a small account with $5 hanging out there. I had problems with XCEL CUSHION and just asked for the share account funds. They sent me a check.
  |     |   Comment #3
I am glad Ken published the EWP of 545 days of interest. That is why I have never purchased any 5 year CDs or others with State Farm. Too bad because they meet my criteria on other facts. However one never knows when an emergency will arise and 545 days is a lot of interest to have to pay back. The norm for banks and credit unions have always been 6 months for the 5 year CD. This may change but while I can get a 6 month EWP, I will stay away from State Farm.
  |     |   Comment #4
Paoli2, the attractiveness of StateFarmBank is with respect to IRA CDs, for those of a certain age. For after-tax funds, you are correct, the EWP is a non-starter.
  |     |   Comment #5
Precisely why a person should never lock all their funds up in long term CDs. Emergency funds should be in a very liquid account. ei. checking, money market, etc.
  |     |   Comment #6
#5 You missed the point of my post. In over 50 years of buying CDs it has been rare that I have had to use the EWP. I would never tie up all our funds in 5 year CDs. I agree one must have their liquid account for those "special" bills. I just have a "thing" about dealing with banks or cus who use such harsh EWPs on customers. Most of my 5year CDs have had even 3 month EWPs and I never cashed in any early.
  |     |   Comment #7
I prefer long term CDS with low EWPS so if rates go up you can take advantage and gain more interest. I have only done this once with Penfed to earn a 5% rate a few years back. I also ladder towards long term CDS. I do keep an emergency fund over 2 savings accounts. Low EWPS may come into play in a rising rate environment.
  |     |   Comment #8
In order to open an IRA CD, you either have to do it over the phone - or, at a local SF agent's office (or, maybe by mail). So, I gave them a call to see how long it would take. The phone wait time was a marginally bearable 5 minutes. The CSR was pretty knowledgable, so I have no complaints there.

The only reason I would even think of having an IRA CD at SFB is due to the no penalty withdrawal after you're 59 1/2. This is a great place to store IRA funds that you plan on doing a distribution from without having to wait 5 years to do so.

Under the current tax code, I can take around 25K in tax-free distributions (will see what the Trumpster does to me this year). So, if the SFB has the lowest rate of the accounts that I have, I can use it for making that 25K distribution.

On the negative side, SFB has some pretty bad reviews. 11 out of 28 reviews are 1 star wonders. When I see that many negative reviews, it does give me pause.  
  |     |   Comment #9
"the highest APY for the 60-month CD since July 2011?".
Really? ...have you forgotten this blog's own article from August of 2015?

E-Loan ( & simultaneously, Popular Community Bank) were kickin' a$$ for the better half of 2015.
I know 'cause I have one of those 5 year CDs with a rate of 2.42%!
  |     |   Comment #10
Highest rate for State Farm since July 2011! You can find rate history by clicking on 60 month rate under State Farm and moving your cursor over graph.
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