The Flagstar Bank invites its consumers to take advantage of their online best cd rates at 4.5% APY for a 48-month special. The certificate of deposit only requires $500.

The 4.5% APY can be enjoyed by account holders with zip codes in NY, FL, CA, and TX. The rate for the market area of the bank (IN, MI, and GA) is 4.24%.

The bank imposes early withdrawal penalties equal to 180 days of interest for terms of 12 to 29 months. CD rates that have terms above 30 months incur a penalty of at least 180 days. The latter may be more depending on their mark to market penalty.

The account gives a 10 calendar day grace period when the CD reaches its maturity. An account holder may opt to withdraw funds through wire transfer or check. The CD yields can also be automatically transferred to a Flagstar Bank account on a monthly or yearly basis.

It appears that IRA CD rates can also be set up but this seems to require a branch visit and cannot be done online.

The bank is also offering a Rising Rate certificate of deposit. The special allows gains of 3% for the first 6 months then the rate increases by 50 basis points every 6 months until it peaks at 4.5%. The composite APY for the program is going on at 3.68%.

The Rising Rate CD program allows withdrawals to be made at the end of each 6-month cycle without having to worry about penalties. The account though requires the maintenance of a primary checking account with the bank. It also requires a minimum of $250 ACH transactions or 15 monthly transactions to qualify for the rate.

The bank was hit hard by the financial crisis and is taking part in the federal government’s bail out program. It will be wise to stay within the FDIC limits.

Flagstar is insured with the FDIC with certificate # 32541.