Review of State Farm Bank Rates

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State Farm CD rates

Regular CDs

CDs from State Farm Bank don’t offer the highest rates available, and with a somewhat complex early withdrawal fee policy, you can likely find a better place to keep your money in a CD.

Term

Less than $100,000

$100,000+

12 months

1.50%

1.50%

24 months

1.50%

1.50%

30 months – special term

1.75%

1.75%

36 months

1.75%

1.75%

48 months

1.75%

1.75%

60 months

1.75%

1.75%

  • Minimum opening deposit: $500
  • Minimum balance amount to earn APY: $500
  • Early withdrawal penalty: If you make a principal withdrawal within six days of your initial deposit, or within six days of your previous withdrawal, the penalty is seven days’ interest. For all other principal withdrawals, the penalty will be the greater of a minimum of $25 or:
    • 90 days of interest for a CD term of 11 months or less
    • 180 days of interest for a CD term of 12 to 23 months
    • 365 days of interest for a CD term of 24 to 47 months
    • 545 days of interest for a CD term of 48 months or greater

We like that the account minimum is low at only $500, which makes it easy to get started with little money. Another benefit is that interest compounds daily and can be added to the CD, paid out to you by check, or deposited into a State Farm Bank account.

However, rates are low compared to many other banks’ CD products, and the complex early withdrawal penalty makes it less attractive if you’d have to withdraw your funds early for any reason.

If you decide to use this product, make sure you invest money that you likely will not need to access during the time that it is invested. Also, you have to move quickly when your CD matures if you want to withdraw your funds without a penalty — there is only a 10-calendar-day grace period after which the CD will automatically renew.

How to get State Farm’s CDs

You can apply for an account directly on State Farm’s website. To be eligible, you must have a Social Security Number, Tax Identification Number, or Individual Taxpayer Identification Number. Minors may open a CD and be listed as the primary or secondary account holder; however these accounts must be opened through a State Farm agent or by phone.

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on State Farm Bank’s secure website

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Coverdell Education Savings Account (ESA) CDs

If saving for your child’s education is important to you, you might consider using a Coverdell ESA. Contributions are not tax deductible, but funds will grow tax-free until distributed. Plus, the earnings are used for qualified education expenses, they can be withdrawn tax-free.

Coverdell ESA funds can be invested in a CD or in mutual funds. CD rates are listed in the table below.

Term

APY (Less than $100,000)

APY ($100,000+)

12 months

1.50%

1.50%

24 months

1.50%

1.50%

30 months – special term

1.75%

1.75%

36 months

1.75%

1.75%

48 months

1.75%

1.75%

60 months

1.75%

1.75%

  • Minimum opening deposit: $500
  • Minimum balance amount to earn APY: $500
  • Early withdrawal penalty: If you make a principal withdrawal within six days of your initial deposit, or within six days of your previous withdrawal, the penalty is seven days’ interest. For all other principal withdrawals, the penalty will be the greater of a minimum of $25 or:
    • 90 days of interest for a CD term of 11 months or less
    • 180 days of interest for a CD term of 12 to 23 months
    • 365 days of interest for a CD term of 24 to 47 months
    • 545 days of interest for a CD term of 48 months or greater

Coverdell ESA CD rates are the same as traditional CD rates. The only difference is that these funds are to be used for educational expenses for students.

The contribution maximum is $2,000 per student per year up to age 18, even if multiple accounts are opened for the same student. This means if you open account for your child and your parents open an account for your child, the combined maximum is still $2,000 per year.

There is also a modified adjusted gross income cap of $95,000 for single tax filers and $190,000 for married filing jointly, after which only a partial contribution can be made to a Coverdell ESA. If your modified adjusted gross income is above $110,000 for single tax filers, or $220,000 for married filing jointly, you are not eligible to contribute to a Coverdell ESA.

Distributions from a Coverdell ESA don’t have to be reserved for college expenses. Any educational expenses for kindergarten through grad school may qualify. Qualified expenses include things like:

  • Tuition and fees
  • Academic tutoring
  • Books, supplies, and equipment
  • Room and board
  • Uniforms
  • Transportation
  • Computers and technology

Coverdell ESA funds can also be invested in mutual funds instead of CDs. Mutual funds may offer higher interest rates, depending on which funds are selected.

How to get State Farm Bank’s Coverdell Education Savings Account (ESA) CDs

An ESA can be opened by anyone, including the child for whom the funds are being saved, as long as their modified adjusted gross income falls without the limits outlined above. The combined total per year cannot exceed $2,000. There is no limit to the number of accounts that can be established for one student.

If funds contributed exceed $2,000, they must be withdrawn before June 1 of the following tax year. If they aren’t, the funds will be subject to a 6% excise tax, which will be reported on the child’s tax return each year that the excess funds remain in the account.

To open an account, call State Farm Bank at 1-877-734-2265.

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on State Farm Bank’s secure website

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How State Farm’s CD rates compare

While State Farm Bank offers a low minimum account deposit to open a CD, better CD rates can be found elsewhere. We’d suggest shopping around to find a higher interest rate CD, or investing your money in a different type of account.

State Farm’s IRA accounts

IRA CD rates

State Farm Bank’s IRA CD has a low account minimum of only $500 and also offers both a traditional and Roth plan. Interest is compounded daily, but rates are low compared to what is available from other banks.

Term

APY

12 months

1.50%

24 months

1.50%

30 months Special Term

1.75%

36 months

1.75%

48 months

1.75%

60 months

1.75%

  • Minimum opening deposit: $500
  • Minimum balance amount to earn APY: $10. If you’re age 59 ½ or older and are taking normal distributions, the account balance may fall below the minimum opening balance. However, it cannot fall below $10.
  • Early withdrawal penalty: If you’re age 59 1/2 or older, normal distributions are allowed without an early withdrawal penalty. However, if you want to transfer funds to a different IRA, withdrawals will be subject to early withdrawal fees. If you make a principal withdrawal within six days of your initial deposit, or within six days of your previous withdrawal, the penalty is seven days’ interest. For all other principal withdrawals, the penalty will be the greater of a minimum of $25 or:
    • 90 days of interest for a CD term of 11 months or less
    • 180 days of interest for a CD term of 12 to 23 months
    • 365 days of interest for a CD term of 24 to 47 months
    • 545 days of interest for a CD term of 48 months or greater

Like other CD products with State Farm Bank, you can withdraw interest earnings without penalty. Another nice benefit with this retirement investing account, you are also eligible to withdraw a portion of your original deposit as a normal distribution without penalty if you are over age 59 1/2. Keep in mind that any interest payments withdrawn will be considered distributions and taxes and IRS penalties may apply if you are under age 59 1/2.

However, one drawback with this account is that you can’t easily access your balance information online, and there are no electronic statements available.

How to get State Farm’s IRA CDs

To open an account, call State Farm Bank at 877-734-2265.

You can open your account with $500 or more and select either a Traditional or Roth plan with terms between 12 and 60 months.

The contribution limit for 2018 is $5,500, or 100% of your earned income, whichever is less. If you are over age 50, you can contribute an additional $1,000 per year.

There are also limits to the amount you can deduct from your taxes based on your adjusted gross income. These limits are based on federal law.

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on State Farm Bank’s secure website

Member FDIC

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How State Farm’s IRA CD rates compare

Rates for State Farm’s IRA CD rates aren’t the highest on the market. There are other banks that offer better IRA CD rates so you can earn more interest on your money. One nice benefit that may not be available at all banks is that interest is compounded daily at State Farm Bank.

IRA Money Market Account

Investing in an IRA Money Market account with State Farm Bank may be easier than using their IRA CD product because you can electronically contribute a portion of each paycheck into your Money Market account. Plus, there’s no time commitment required for your investment.

Minimum balance amount

APY

$100 - $9,999

0.50%

$10,000 - $24,999

0.75%

$25,000 - $49,999

0.75%

$50,000 - $99,999

0.75%

$100,000 - $249,999

0.75%

$250,000 - $24,999,999

0.75%

$25,000,000+

0.50%

  • Minimum opening deposit: $1,000
  • Minimum balance amount to earn APY: $100
  • ATM fee: None
  • ATM fee refund for foreign transactions: Up to $10
  • Overdraft fee: $25 maximum of 3 per day

With State Farm Bank’s IRA Money Market Account, there is a minimum deposit of $1,000 required to open your account. However, if you take distributions, your account balance may fall to less than $1,000. The minimum balance required to earn interest is $100; however if your average daily balance is less than $500, you will be charged a minimum balance fee of $10.

Withdrawals from this account prior to age 59 1/2 may be subject to IRS penalties. Plus, you must give at least seven days notice before making any transfers or withdrawals from your account.

Interest on this account compounds daily but is only added to your account balance monthly.

You are only allowed to make six transfers from your account each month by phone or mail, otherwise you may be subject to an excessive transaction fee of $10. State Farm also has the right to refuse transactions after you’ve hit the limit, or even close your account. You can make unlimited withdrawals by mail or telephone.

How to get State Farm’s IRA money market account

To open an account, call State Farm Bank at 877-734-2265.

To be eligible, you must be at least 18 years old. IRA money market accounts can only have one owner.

SEE DETAILS Secured

on State Farm Bank’s secure website

Member FDIC

State Farm’s checking account options

Interest Checking

Although the minimum amount required to open a State Farm Bank Interest Checking account is only $100, you must maintain an average daily balance of $500 in order to avoid a minimum balance fee. In addition, your account must have a balance of $2,500 in order to earn the stated interest rates.

Minimum deposit amount

APY

$0 - $2,499

0.00%

$2,500+

0.25%

  • ATM fee: None.
  • ATM fee refund for foreign transactions: Up to $10
  • Overdraft fee: $25, maximum of 3 per day. Overdraft protection is $3 for a transfer from another State Farm Bank account.

You can’t just deposit $100 to open your account and begin earning interest. In fact, if you only deposit $100 to open your account, you will be subject to a minimum balance fee of $10 if your average daily balance isn’t at least $500.

Plus, if you want to earn interest on your money, you have to have a balance of at least $2,500, significantly more than the minimum required to open the account, or even the minimum required to avoid the minimum balance fee. If you don’t read the fine print, this can be misleading.

There are much better options for interest bearing checking accounts with higher APYs and lower minimum balance requirements.

How to get State Farm’s Interest Checking account

You can apply for an account online in only 10 minutes. You must have a Social Security Number, Tax Identification Number, or Individual Taxpayer Identification Number in order to apply.

There must be at least one account holder that is age 18 or older. Minors may be account holders, but you must open an account with a State Farm agent or by phone.

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on State Farm Bank’s secure website

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Regular Checking

The requirement to open a regular checking account is much lower, plus there are no minimum balance fees to contend with.
  • Minimum deposit amount: $25
  • ATM fee: None.
  • ATM fee refund for foreign transactions: Up to $10
  • Overdraft fee: $25, maximum of 3 per day. Overdraft protection is $3 for a transfer from another State Farm Bank account.

While this account doesn’t earn any interest, we like that there are essentially no fees if you don’t overdraw your account. It also has handy features like mobile check deposit and a mobile banking app. You can also get account alerts by text or email.

It may be a good option for those who aren’t able to meet the minimum balance requirements for State Farm Bank’s Interest Checking account.

However, there are still plenty of online banks that offer interest-bearing checking accounts with no or low minimum balance requirements. You may as well be earning interest on your money with an online bank if you can.

How to Get State Farm Bank’s Regular Checking Account

You can apply for a regular checking account online on State Farm’s website in only a few minutes.

To be eligible for a checking account, you have to have a Social Security Number, Tax Identification Number, or Individual Taxpayer Identification Number. There can be multiple account holders listed, but at least one of them must be 18 years or older. If the account will have a minor listed, it must be opened over the phone or with a State Farm agent.

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on State Farm Bank’s secure website

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How State Farm’s checking accounts compare

Compared to these interest-bearing checking accounts with several online banks, there’s no way State Farm Bank can be competitive. Their account minimums are much higher in order to earn interest. Even then, the amount of interest earned with State Farm is significantly lower than other banks.

We suggest checking out other options besides State Farm if you want to earn interest on your checking account.

State Farm Bank’s savings account options

Consumer Savings Account

The interest rate on State Farm’s Consumer Savings Account may be higher than some brick-and-mortar banks, but it can’t compete with online savings options.

Minimum balance amount

APY

$0 - $9,999

0.10%

$10,000 - $24,999

0.30%

$25,000 - $49,999

0.30%

$50,000 - $99,999

0.30%

$100,000 - $249,999

0.30%

$250,000 - $24,999,999

0.30%

$25,000,000+

0.10%

  • ATM fee: None.
  • ATM fee refund for foreign transactions: Up to $10
  • Overdraft fee: $25, up to 3 per day. Eligible for $3 overdraft protection from a linked State Farm Bank account.

The minimum deposit to open a savings account is $100. If the main account holder is over age 18, there is a minimum balance requirement of $100; if the balance falls below $100, a $3 fee will be charged.

This could be a good starter savings account for those under age 18 who are looking to earn a little interest on their money, especially since there’s no minimum balance fee for main account holders under age 18. That said, there are other online savings accounts with much higher interest rates available.

How to get State Farm’s savings account

A savings account can be opened online if you are over age 18 and a minor won’t be listed as an account holder. However, if a minor will be an account holder, you must open the account by phone or by working with a State Farm agent.

To be eligible for a State Farm savings account, you have to have a Social Security Number, Tax Identification Number, or an Individual Taxpayer Identification Number.

SEE DETAILS Secured

on State Farm Bank’s secure website

Member FDIC

Health Savings Account (HSA)

Having a HSA is a nice option for State Farm Bank customers; however, higher interest rates can be found elsewhere.

Minimum balance amount

APY

$0 - $2,499

0.05%

$2,500 - $9,999

0.15%

$10,000+

0.40%

  • Annual fee: $25
  • ATM fee: None
  • ATM fee refund for foreign transactions: None

An HSA can be a good way to get tax benefits and earn a little interest at the same time. State Farm’s HSA works essentially like a checking account, but it’s only to be used for qualified medical expenses.

There is no minimum balance fee associated with this HSA account, and after opening, you can make deposits at any time. There is an annual fee of $25 on the first anniversary of your account opening and every year thereafter.

Having an HSA can be a good idea, but you can likely find one with a better interest rate.

How to Get State Farm’s HSA

If you want to open an HSA with State Farm, call 877-734-2265. There is no option to apply online.

By federal law, you can only use an HSA in combination with a high-deductible health insurance plan.

SEE DETAILS Secured

on State Farm Bank’s secure website

Member FDIC

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How State Farm’s savings accounts compare

While it is a good idea to have a savings account, you can earn more interest on your savings by using a different institution. Savings interest rates with State Farm are low, especially when compared to online savings accounts.

State Farm Bank’s Money Market account

Consumer Money Market Account

If you’re new to State Farm Bank, this is the best way to earn extra interest on your initial account opening and deposit. There is an introductory interest rate of 2.00% (1.17% APY) for your first deposit up to $249,999.

Minimum balance amount

APY

$0 - $9,999

0.50%

$10,000 - $24,999

0.75%

$25,000 - $49,999

0.75%

$50,000 - $99,999

0.75%

$100,000 - $249,999

0.75%

$250,000 - $24,999,999

0.75%

$25,000,000+

0.50%

  • ATM fee: None.
  • ATM fee refund for foreign transactions: Up to $10
  • Overdraft fee: $25, up to 3 per day. Eligible for $3 overdraft protection from a linked State Farm bank account

A State Farm Money Market Savings account will help you earn more interest than a traditional savings account with State Farm. If you have the funds available to do a large introductory deposit, you can earn extra interest versus depositing smaller amounts over time because of State Farm’s special introductory offer.

The minimum amount required to open an account is $1,000. However, if you withdraw a portion of your funds later, keep in mind that there is a minimum balance fee of $10 that will be imposed if the average daily balance is below $500.

Like other savings accounts, there is a limit of six transfers from your account each month, including automatic transfer, bill pay, etc. If you go beyond six transfers, State Farm has the right refuse your transaction or even shut down your account. You may also be subject to a $10 fee for excessive transactions. There is also a requirement that you must provide written notice at least seven days before any withdrawal or transfer from the account.

How to get State Farm’s Consumer Money Market Account

You can apply for an account online. To be eligible, you must have a Social Security Number, Tax Identification Number, or Individual Taxpayer Identification Number. One account owner must be over age 18. If a minor will be an account owner, the account must be opened over the phone or via a State Farm agent.

SEE DETAILS Secured

on State Farm Bank’s secure website

Member FDIC

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How State Farm’s money market account compares

While the regular rates on State Farm’s Money Market Savings are not as high as the special introductory rate, they’re much higher than with State Farm’s regular savings account. However, there are still higher money market rates available at other banks. We think it’s a good idea to shop around for a better rate.

Overall review of State Farm banking products

State Farm does have decent terms and interest rates on their products, but they’re certainly not the lowest rates on the market. However, if your main concern is getting the most interest for your money, we recommend finding another bank to house your funds. State Farm is consistently outperformed by other banks that offer higher rates and similar (if not better) terms.

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