State Farm may be best known for insurance, but it also dabbles in the banking business. State Farm Bank is a good fit for people who like online banking and who choose to invest in money market accounts and other retirement account options. Finding a bank branch is a challenge, so you may want to choose a different financial institution if you like banking in person. When it comes to State Farm Bank’s interest rates, it’s hit-or-miss. The bank’s basic savings account has an effective APY of almost 0%. However, the bank does offer decent interest rates on CDs.
State Farm Bank at a glance
|Minimum Savings Deposit||Maximum Savings APY||1-Year CD Rate||J.D. Power Survey Score||Key Benefit|
|State Farm Bank||$0||0.30%||0.80%||N/A||Interest-bearing checking account|
What we like about it
State Farm Bank has some crucial advantages that could make it a good fit for some people. To begin with, SFB offers checking account options with no monthly fees and no minimum deposit. State Farm Bank also offers an interest-bearing checking account with a competitive APY. Almost all of the bank’s offerings have some tiered interest rate component to reward members with more savings. Some of these accounts offer higher interest rates than many other banks. State Farm Bank also features liberal ATM fee reimbursement — even when you’re traveling abroad.
Things to consider
For all of State Farm Bank’s strengths, there are some aspects of its offerings that deserve a closer look. One thing to consider is that there are no physical branches or locations, so in-person banking is out. Also, while State Farm Bank does reward customers who maintain high balances, the bank does not provide many advantages for those who do not. State Farm Bank pays very little interest on smaller accounts. Finally, would-be customers should note that while ATM fees are reimbursed, this doesn’t happen until the end of the billing cycle.
State Farm Bank checking account
State Farm Bank has two checking account options. The first is a standard checking account. There is no minimum deposit, no minimum balance and no monthly fee. While there are no rewards, account holders can receive higher interest rates on other State Farm banking products. State Farm Bank also offers Interest Checking. It also has no minimum opening deposit, and there are no monthly fees as long as the account holder uses direct deposit. The 0.25% APY is decent, but only kicks in when the balance of the account is over $2,500.
State Farm Bank savings account
State Farm Bank unfortunately only offers one savings account. There is no minimum deposit to open the account. It does have a monthly maintenance fee, but that can be waived with direct deposit. The APY on this account is very low until the balance reaches $5,000, then it triples.
State Farm Bank money market accounts
State Farm Bank has one money market account on offer. It is called the Money Market Savings Account, and the interest rate it pays is relatively high at 1.01% APY to start. SFB’s money market account is unique because account holders can write checks on the account or withdraw funds via an ATM. It can also be linked to a State Farm checking account for overdraft protection. There is one potential drawback — customers need $1,000 to open a State Farm Bank money market account.
State Farm Bank CDs
State Farm offers fixed-rate certificates of deposit in terms of 12 months to 60 months. The longer the CD term is, the higher the APY on the account. It only takes $500 to open a State Farm Bank CD, and they renew automatically. Customers get a 10-day grace period to make any changes after the CD matures, including adding funds to the account. There is also a Special Term CD that features an even higher interest rate. When it renews, it rolls over into the next standard term CD duration.
State Farm Bank IRA accounts
State Farm Bank offers both traditional and Roth IRA options. While these accounts follow standard IRS contribution limits, people who are 50 or older may be able to contribute an additional $1,000 — it is called a catch-up contribution. State Farm Bank customers can fund their IRAs from their SFB account, mutual fund, or annuity. The bank can also help you rollover IRAs from a previous employer.
State Farm Bank credit cards
State Farm Bank has four credit cards on offer, each with a different focus. For people who want to establish their credit histories, there is a State Farm® Student Visa®. The interest rate is decent for a starter credit card, and it lets users earn points on purchases; the account holder must be enrolled in a post-secondary school to qualify. State Farm also has the State Farm® Good Neighbor Visa®. It features a low APR for people with high credit scores. There are no rewards, but there are also no fees.
For those who want to earn points on their purchases, there is the State Farm® Rewards Visa®, which pays one point per dollar spent. State Farm has a business-oriented card as well — the State Farm® Bank Business Visa®. It pays double points on office supplies and travel spending.
State Farm Bank investing
State Farm Bank doesn’t have a brokerage component, but it does offer investment options. The bank has education savings opportunities such as 529 savings plans and Coverdell Education Savings. State Farm also offers mutual funds with ties to BlackRock and American Funds by Capital Group as well as annuity products.
The bottom line
State Farm Bank offers a decent range of products and reasonable interest rates as long as account holders meet specific requirements. You will need to maintain a minimum balance to get the best interest rates as well as a direct deposit to the account to waive monthly maintenance fees. State Farm Bank may not offer as many advantages to people who do not meet those parameters.
State Farm Bank exists entirely online, and its interest rates are on par with other online banks. However, State Farm Bank offers certain products that its rivals often do not, like CDs and credit cards. Plus, the bank rewards account holders who open multiple accounts with preferable rates.