I just received news from my PenFed contact regarding future 10-year CD and IRA CD at PenFed. I'm afraid there is still no new information on a potential release date for the 10-year CD. I was told the product release is on hold for now. Back in September they had January as a preliminary target for the 10-year CD launch.
I wasn't told of the reason for the hold. Perhaps it's a combination of the low interest rate environment and weak loan demand. They have been recently advertising auto loan promotions.
For those who weren't able to participate in the September Watch It Grow promotion, there were hopes that all members would be able to open 10-year CDs in January with rates higher than the 7-year CD rates.
Those who were able to participate in this Watch It Grow CD promotion last September could open 10-year CDs in January with a 5% APY. Other options included a 4.25% APY 7-year CD and a 3.50% APY 5-year CD. These promotional rates are no longer available. Unfortunately, the new rates are much lower. In the last few months, PenFed has been lowering its CD rates at the start of each new month. The 7-year CD is now 2.75% APY and the 5-year CD is now 2.25% APY. These and the other CD rates are listed at PenFed's Money Market Certificates page as of 3/8/2011.
Some may question opening a 10-year CD even with a 5% APY. I was told the early withdrawal penalty matched that of the 7-year CD (up to one year of interest). So if you close the CD at year 2, your effective yield after the penalty would be close to half of 5% (2.5% is a rate much higher than any 2-year CD that's available today). This effective yield goes up for each month you hold on to the CD.
With PenFed current low CD rates, you'll probably be better off with other banks like Kaiser Federal Bank which is offering a 5-year CD special with a 3.00% APY (as of 3/8/11) and with only a 6-month early withdrawal penalty or Ally Bank which is offering a 2.40% APY 5-year CD with only a 60-day early withdrawal penalty. I described the benefits of this Ally 5-year CD and the benefit of Ally's No-Penalty CD in this Ally Bank CD review.