PenFed's money market certificate page had a mistake regarding the 5-year certificate. In the top promotion area of the page, it listed the 5-year yield as 5.25%. However, the rate table listed the 5-year yield of 5.00%. I've confirmed that only the 7-year term has the 5.25% APY.
With the current rate environment, I can understand a 5.25% yield compared to last year's 6.25% yield, but I had thought they would have this yield apply to terms from 3 to 7 years. Last year the 6.25% yield applied to terms from 3 to 7 years. My source did say that they intend to smooth out the certificate demand for 2008. Since 7-years is a very long term for most people, I'm sure they won't see a spike this time. As you can see in my last week's rate summary, you can get better 5-year and 7-year CD rates at other banks and credit unions.
One important note regarding a 7-year term is that the penalty for early withdrawals is much more severe than the early withdrawal penalty for the shorter terms. The 7-year penalty is up to one year of interest. If the certificate is closed before one year, the penalty is all of the interest that has been earned. The 5-year penalty is only up to 180 days of interest.
I have more details on PenFed's certificates and on joining PenFed in this September PenFed post.
Other PenFed Deals
As I mentioned last week, PenFed has other good deals. These include low rate auto loans and a cash back credit card which will soon give 2% cash back on groceries in addition to 5% on gas and 1.25% on all other purchases.
PenFed also has very competitive home equity loan rates. The lowest fixed rate is 4.99% APR for terms up to 10 years. As this blog article describes, home equity loans can be useful to consolidate high interest debt such as credit cards. However, this requires a high level of responsibility. Another advantage of HEL's is that thay are tax deductible. This Bankrate article has some useful details regarding tax deductability of home equity loans.