Happy New Year! PenFed Raises CD Rates for January

Update 1/05/2010: I received info from my PenFed contact about the rollover CD rates. Please refer to this new post for the details.

Happy New Year! Thanks to everyone for reading, and let's hope that 2010 has some improvements for us savers.

Pentagon Federal Credit Union did increase some of its CD rates for January, but I'm afraid they're 25 basis points lower than what I was told by my PenFed contact. Perhaps they had more members agree to renew their CDs than what they had planned. Nevertheless, the new rates are competitive. They went up 50 basis points for terms of 3, 4 and 5 years. Unfortunately, the 7-year rate went down by 25 basis points. Below is the summary of PenFed long-term CD rates as listed at the PenFed Money Market Certificate page as of 1/01/2010:

• 3.00% APY 3 year
• 3.25% APY 4 year
• 3.50% APY 5 year
• 3.75% APY 7 year

I'm currently unable to confirm the renewal rates. I would think those who were early to participate in PenFed's Certificate Reservation Offer should be getting rates 50 basis points higher than the above rates. I'm hoping this will also apply to those who were late to participate since I was told of these higher rates by my PenFed contact and by two PenFed CSRs. It may just be 25 basis points higher than the above rates. I had one CD that matured today, and I had set it to renew. I logged in this morning, and it still hasn't rolled over to the new CD. When I receive renewal rate info, I'll be sure to update this post. Please leave a comment if you receive info on this.

Update 6:00pm 1/1/10:

I called PenFed today, and I have some new info based on my conversation with the PenFed CSR. However, I should note that the CSR didn't know much. I sent an email to my PenFed contact to find out what happened and who will be eligible for what rates. I don't expect a reply until Monday at the earliest.

I again logged into my PenFed account. The CD that matured today still shows the old CD rate and term. According to the CSR, the new rate and term should show up tomorrow after the holiday.

I'm assuming that those who were able to participate in the November Rollover Subscription Promotion (before it was canceled) should get the rates that PenFed listed which are 50 basis points higher than above. I'll know more when I receive the reply.

For those who missed the November Rollover Subscription Promotion but had set their CDs to rollover (like me), there is a question about what rates we'll get. According to the CSR, we'll just get 25 basis points over the listed rates which comes out to 4% 7yr, 3.75% 5yr, 3.50% 4yr and 3.25% 3yr. I told my PenFed contact that I and many of my readers were informed by PenFed reps that the rates would be 25 basis points higher. I'm hoping we'll be able to get those rates.

It appears the Board of Directors decided in December for the lower rates. The CSR didn't know much more.

PenFed Certificate Details

For more details about PenFed's CDs and joining PenFed, please refer to this PenFed review post. Details of the CDs are available in the second page of PenFed's account application. A few important details to note:

• Early withdrawal penalty for the terms of 3 to 5 years is 180 days of dividends (all dividends if redeemed before 180 days from issue date)
• IRA CDs available with the same rates
• IRA CD holders over 59½ can avoid most of the early withdrawal penalty (see see post)

Note, there's no grace period. However, the early withdrawal penalty for the first 180 days is not 180 days of interest but just the interest earned from the issue date. So if you change your mind about renewal a couple of days after the CD matures, you should be able to do an early closure and lose only those couple of days of interest. Many banks don't pay interest during the grace period if you don't renew. So this PenFed feature is no worse.

Membership

PenFed makes it easy for anyone to join and open accounts online. If you don't qualify based on military, employer or family, you can become eligible by joining the National Military Family Association (NMFA). Please refer to How to Join Overview Page for details. Joining NMFA and Penfed can be done at the same time all online. The yearly membership for NMFA is $20, but your membership in the association does not need to be maintained to continue as a Penfed member. You can also be eligible to become a member of PenFed if you are an employee or volunteer of the American Red Cross (refer to this PenFed page).

Branch Locations

Accounts can be opened online, but for those who prefer branches, PenFed has branches in several parts of the country including Washington DC, Maryland, Virginia, New Jersey, New York, Colorado, North Carolina, Hawaii, Puerto Rico, Missouri and Texas.

Financial/NCUA Info

PenFed's ratings for safety and soundness are no longer the best, but they remain respectable: 4 stars (excellent) at BauerFinancial (based on 9/30/09 data) and 3 stars (performing) at Bankrate.com (based on 6/30/09 data).

PenFed is one of the largest credit unions in the US with $13.4 billion in assets and 889,874 members. It's federally insured by the NCUA (Charter # 227).