For the main details of Penfed, joining Penfed and Penfed's new 6.25% CD, please refer to this post. Please refer to Penfed's website for the official details. Below is a list of additional details and observations that I received from readers along with my inputs:
- Funding the Savings Account - When I joined in September, only the credit card option was available to fund the share savings account online. Readers are reporting that you now can fund savings account with an ACH transfer or check in addition to a credit card. Also, you can use a debit/check card instead of a credit card to fund the savings account. Only $5 is the required minimum deposit for the savings account.
- Hard Credit Inquiry - A hard credit pull is done when you open your share savings account (when you join). I was told that no additional hard pulls are done for opening CDs. They will also do a hard pull for checking accounts, loans and credit cards. I just checked by credit report at Equifax and there was just one hard pull done by Penfed when I first joined. It did not show any hard pulls for the two CDs that I purchased so this seems to confirm what I was told by the CSR. One reader mentioned the following:
A CSR confirmed today, that Hard credit pull is done to almost everyone opening CD by calling CSR and or opening online with amounts > 10K. Also, they run hard credit pull on every 9th or 10th customer as required by law, for quality control purposes.Another reader mentioned this:
They do a hard pull for opening an account, but they use the same pull for 60 days. So if you bite the bullet and take the hard for opening a share account, they will use that same hard (ie not initiate a 2nd hard pull) for a credit card app. So anyone planning to apply for membership via a share account should seriously consider applying for the 1.25% credit card at the same time.Note, the hard pull may lower your FICO score by about 5 points. The effect should be removed in about 6 months.
- Avoiding the $20 Fee - You may qualify for Penfed membership without having to join NMFA (and paying the $20 fee) if you have an immediate family member who qualifies. The family member does not need to be a Penfed member. For example if your dad receives retirement benefits from the Army and isn't a Penfed member, you are eligible.
- How Quickly Can a CD be Opened - A reader asked if you have to return the signature card after you join before you can open a CD. I was able to open a CD in September before I sent back the signature card. You just need to be able to log in to open the CD online. A reader mentioned that he had to call to receive the PIN that allowed online access.
- Maximum Deposit - The maximum deposit when funding the CD using the online application is $10K. I was told that this cap is removed after you're a member for 6 months. You can go above this by opening the CD by phone. A reader reported opening a $100K CD by phone by giving the CSR his bank's routing number, his account number and check number.
- Special IRA Provisions - If you're over 59 1/2 years of age, you can change your IRA CD without penalty. A reader reported that he changed a 3.5% CD with a year left to a new 6.25% rate in a matter of minutes with no penalties.
- Safety - Bauer Financial's rating of Penfed is 5 out of 5 stars (superior) based on September 30, 2006 financial data. Bankrate.com's rating is 3 out of 5 stars (performing) and is also based on September 30, 2006 financial data. I'm not sure why there's this much discrepancy or how significant this is. As I mentioned before, Penfed is federally insured by the NCUA.
- How Long Will It Last? - A reader noted that Penfed has been coming out with very high long-term CD rates this time of year for the last 3 years, and this is likely the time of the year in which they build their funds. In the past these rates have continued for a few months into the new year.
Regarding the last point, Penfed came out last year with a 6% 7-year CD, a 5.75 5-year CD and a 5.50% 3/4-year CD at the end of December (see post). For comparison, the best 60-month CD that was listed at Bankrate.com at that time was 5.15%. Thus, the current 6.25% CD rate shouldn't be considered unusual. Based on history the rate should last for a few months. However, with more people using the internet for banking and interest rates likely to fall next year, there could be more demand for these CDs than what Penfed has experienced in the past. So you may not want to wait to after January.