Dedicated to Deposits: Deals, Data, and Discussion
DETAILSINSTITUTIONAPYMINMAXPRODUCT
Pentagon Federal Credit Union1.11%$1k-4 Year Money Market Cerificate
Pentagon Federal Credit Union1.00%$1k-3 Year Money Market Cerificate
Accounts mentioned in this post. Rates as of July 30, 2014

PenFed Raises 3-Year and 4-Year CD Rates

POSTED ON BY

Pentagon Federal Credit Union (PenFed) CD rates are getting better each month. Last month PenFed raised its 5-year and 7-year CD yields to 2.02%. Today PenFed raised its 3-year and 4-year CD rates to this same 2.02% APY. This is the first nationally available 3-year CD with a yield above 2% that we’ve seen in a long time. Thanks to DA member Shorebreak who posted on this news in the forum. Below is a list of these new CD and IRA CD rates in effect as of November 1, 2013:

  • 2.02% APY 7-year CD (no change)
  • 2.02% APY 5-year CD (no change)
  • 2.02% APY 4-year CD (was 1.76%)
  • 2.02% APY 3-year CD (was 1.51%)
  • 1.26% APY 2-year CD (no change)
  • 0.75% APY 1-year CD (no change)

PenFed calls their CDs "Money Market Certificates", but they are essentially certificates of deposit (CD) with fixed rates for specific terms.

Minimum deposit is $1,000. The rates are also available in an IRA. The early withdrawal penalty is up to 180 days of interest for terms from 1 year to 4 years. The penalty is up to 365 days of interest for terms of 5 and 7 years. The penalty doesn’t eat into the principal. For example, if you withdraw principal before 1 year on a 5-year CD, you’ll lose all interest but none of the principal.

Even though PenFed typically maintains CD rates through the month, they no longer guarantee it. For more details about PenFed CDs, please refer to my PenFed CD review.

PenFed 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 (one-time $20 fee) or by joining the Voices for America's Troops (one-time $15 fee). Joining one of these organizations and joining PenFed can be done at the same time all online. Our PenFed overview section has more details on PenFed’s membership qualifications.

To join PenFed, click on the "Join PenFed" link at the top of any PenFed page. This will take you to the start of the online application. That first page asks about eligibility. If you don't qualify via any of the listed options, click "None of the above". A popup informs users that "We can establish your membership eligibility through either National Military Family Association or Voices for America's Troops." When you close the popup, you are then asked to select one of these two organizations.

Branch Locations

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

Credit Union Overview

PenFed is the third largest credit union in the nation. It has $12.5 billion in deposits. PenFed has an overall health grade at DepositAccounts.com of A+ with a Texas Ratio of 3.17% (excellent) based on June 2013 data. Please refer to our financial overview of PenFed for more details. It's federally insured by the NCUA (Charter # 227).

Is a 3 Year Term Too Long?

Many savers have been worried about opening a 5-year CD to get a 2% rate. They don’t want to be locked into a CD if rates start shooting up. PenFed’s 3-year CD makes the decision a little easier. Will we see significantly higher interest rates in the next 3 years? Even if rates start to rise in 2016, this 3-year CD may still be a better deal than if you kept your money in a savings account. Of course, if rates shoot up in 2014, you’ll regret this CD. However, if rates don’t go up fast, you may appreciate this CD.

Searching for the Best CD Rates

To search for the best nationwide rates and the best rates in your state, please refer to the following tables at DepositAccounts.com:


  Tags: New York, North Carolina, Hawaii, Texas, Virginia, Pentagon Federal Credit Union, CD rates, Maryland, IRA rates

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Comments
27 Comments.
Comment #1 by Hoody posted on
Hoody
Now if only NFCU would play a little catch up!!

3
Comment #2 by rav posted on
rav
Unfortunately, for new customers (those open less than 6 months) PenFed limits new certificates opened online to $25,000, and you cannot open more than one every 4 days.  According to a customer service representative, the only way to fund a certificate for a larger amount in this case is to wire transfer the funds into your share savings account and then open the certificate.  The CSR said there were no incoming wire transfer fees by PenFed, but you'll likely have fees at the originating financial institution.

5
Comment #3 by OAG (anonymous) posted on
OAG
Not usually a problem even if you have to wait 4 days (to open another MMC/CD) since PFCU generally does not change rates mid-month (I know there are no guarentees). Glad to see this on their part.

4
Comment #4 by paoli2 posted on
paoli2
I was holding off on the 5 year CD due to the one year EWP.  I like the 3 year with the 180 days EWP much better.  I hope it's still available when my two Chase CDs mature in a couple of weeks.  I already have an account with PenFed.

6
Comment #5 by Anonymous posted on
Anonymous
Just opened a 3 year.  I just couldn't put money in a CD for 5 years at  @ 2.00%.   If rates go up the banks and CU's would probably not allow early withdrawls so be careful with that stradgey.  If you going to pull the trigger on the 3 or 4 year I would do it soon as they can lower that rate anytime.

 

   It does look like this is not a mistake like the 10 year 5% CD they had a few years ago that was quicky yanked.  That one looked like an error.  The 2.02% is on the homepage.

4
Comment #6 by paoli2 posted on
paoli2
#5  I just called Pen Fed to verify that the 3 and 4 year CDs are 6 month EWPS.  The rep told me the rates are good for a month.  However, in these bad times, I would not wait too long to get the CDs if it were something I really wanted.  I have to wait for my funds for a couple of weeks to get but if she is right and the rates haven't changed, I hope to wire them the funds.  Chase charges to wire out but since PenFed doesn't have shared branches it's either a wire or mail them the money which I don't want to do.  Who knows but maybe in another two weeks we will see other banks and/or CUs giving us more choices.  It's something to hope for.  I was heading out of town for the 2% so at least that will save me some gas money.  Thanks Shorebreak for sharing this with us.  I was on their webpage just yesterday morning and did not see the new rates.  It's amazing how fast they can change these days.

4
Comment #7 by Anonymous posted on
Anonymous
Paoli2  -  This is from the disclosure.  Does it gurantee the rate for 1 month? 

"Annual Percentage Yield (APY) is accurate as of November 01, 2013 - November 30, 2013 and is subject to change at any time."
 

 

Also,  Early withdrawls are limted to the DA. Read Allys and in one section it says they can change terms on an existing CD (Ken has posted this too.  They can tell you what the penalty is but if they don't allow an early withdrawl it really dosen't matter.

 

  I do hope that you get the rate

1
Comment #9 by paoli2 posted on
paoli2
#7 We live in a time when truth has a different definition than it used to.  You are right.  Just because the rep believes what she reads about the CD does not mean it will be true.  This is why I am waiting until the last minute before wiring them my funds.  I have had another CD with them for many years and they have always been truthful with me but that doesn't mean the same goes for today.  I will call them on the day I am wiring the money and try to reaffirm if they will keep their word.  Most banks and CUs I know are adding info to give themselves an "out".  They basically are making their CDs "callable" at their own intent.   Sooo I will use them to get what interest I can and stay with a CD term I am pretty sure I will not have to early withdraw.   Frankly I don't think any bank or CU wants the word to get out that they are refusing to allow people to early withdraw their own money if need be.  When this really happens, our country is in worse shape than any of us realize.

5
Comment #8 by Anonymous posted on
Anonymous
If they get too many people asking for these artes I'm sure it won't last for a month.

1
Comment #10 by Anonymous posted on
Anonymous
Paoli2  - You could call PENFED today and another call person can give you another story.   I do hope you get the rate but don't bank on what some low paid rep says .vs what is in a legal disclosure.  CD's aren't callable.   They give you the rate promised for the term (Some brokered CD's are callable).  The goverment can call them if your bank goes under.  If rates go up fast the banks have outs so you can not make an early withdrawl.   If they let everyone take their money out then the banks/CU's would fail.  They are businesses and don't want to fail.  Also the goverment could come in and change things in a worst case senerio (ex Cyprus)

1
Comment #11 by Anonymous posted on
Anonymous
This new CD special appeared last night @ 12:01 and sure enough DA was all over it first thing this morning! Spoke to two reps who gave slightly different information. PenFed is a lttle different than what I'm used to, for example they will not transfer the interest to your bank every month. Also, if you initially elect to have interest compounded you cannot call them to get any prior interest sent to you, but you can change how you want the interest paid going forward. The second rep clarified that you can do a max 25K ACH each day, but unless you want to wait for your total amount to be transferred , or want to open multiple CDs on different days, just mail them a check, and funds start earning interest on the day received.

8
Comment #12 by paoli2 posted on
paoli2
I have not had any problems with Penfed since with them.  I do not like the fact that they won't electronically transfer our interest to my local bank account but many of my banks and cus do not do this even in these days of electronic banking.  They always mail the check monthly to our apartment address so I don't have a problem with that.  They also don't do Shared Branches which I wish they did.  However, if the rate is what I can live with, I will put up with these negatives.

5
Comment #13 by moneysaver posted on
moneysaver
Re the interest credits from PFCU, what they will do is automatically sweep your monthly interest payments from their CDs into your PFCU share account. Then, once all the credits pop up there on one day each month, I simply use one of my external (non PFCU) accounts with free ACHs to pull the money out and into one of my regular use rewards checking accounts.

 

5
Comment #14 by paoli2 posted on
paoli2
Moneysaver:  I always get my interest checks mailed to us.  How do I find out which local banks have free ACHS so I can pull the money out and deposit into my local checking account?  Do I have to call all the banks and cus in town?  I know Chase charges to send out money from my account to another institution. Maybe they don't charge if the interest is sent to them.  This would be a better solution if it is free. Thanks.

2
Comment #15 by paoli2 posted on
paoli2
Moneysaver:  It just occurred to me.  How can you do what you say when Penfed told me they aren't set up to electronically send the interest to another institution?  Do you request it in a special way they can do it?

2
Comment #16 by paoli2 posted on
paoli2
I was just given some additional info from a Penfed rep which I found very helpful and would save me a few dollars.  She said when my other CDs mature, if I deposit the money to my checking account or whatever account I use, I can open the Penfed CDs over the phone with Penfed on the same day.  If I give them the routing and account number, they will withdraw the amount needed for the 2 CDs I want and use the info I give over the phone to open CDs and then mail the certificate copies to me.  This way I will not have the charge from Chase to Wire-Out the funds and the CD forms will not get to them late via mail.  She said their rates usually change on the first of the month.  I asked her if she was sure it could be done like this and she said that is one of her jobs and she does it every day.

Has anyone here used this method of purchasing CDs and allowing the institution to just go into your account and withdrawing the money needed?  Have you had any problems doing it this way?  Thanks!

3
Comment #17 by OldGuy posted on
OldGuy
I've opened CDs at PenFed using a variety of funding options.  I've moved money by ACH or wire transfer into my PenFed regular savings account, and then, when it's become available, opened CDs using it over the phone.  I've also made conributions into my PenFed IRA savings account, both regular and Trustee-to-Trustee transfers, and opened IRA CDs with the funds over the phone.

Last year, PenFed let me open, within my first six months, $25k CDs by ACH transfers on consecutive days.  It didn't make me wait 4 days between account openings.  I didn't have the problem #2 described, so there may have been a change in policy. 

2
Comment #18 by moneysaver posted on
moneysaver
Paoli... you seem to be talking about two different things in your posts above.... how to handle interest payments that PFCU credits to your existing PFCU accounts, and then separately, how to fund new PFCU CDs..

I spoke above about how to handle PFCU interest payment credits from their CDs. In my case, the only thing I had to do with PFCU was to instruct them to handle my PFCU CD interest payments as a monthly transfer (which they do automatically) to my PFCU share account.

Then, outside PFCU, I simply use any of my existing checking accounts at other financial institutions that allow linking to other accounts and free ACH transfers. Set up the link between my external checking account in its online banking with my PFCU share account. And then each month go into my external checking account's online banking to "pull" ACH the PFCU interest funds into my external checking account for general use.

How each bank or CU handles the issue of allowing its accountholders to perform inter-bank ACHs is simply a matter of their individual policy. Many allow such ACHs for free. Many don't, either by not allowing ACHs or charging a fee. The good news is, usually, more banks are willing to accommodate free ACHs of funds INTO their accounts than are those willing to let you send money OUT of their accounts for free.

I have various checking accounts with various institutions, and often need to move funds around. So, over time, I've made sure to keep and use banks and accounts that offer free in and outbound ACHs. Even the mediocre Bank of America, last time I checked, allowed its regular checking account holders to perform free ACH transfers of funds into their accounts via BofA online banking.

Charles Schwab and E-Trade checking both allow free inbound and outbound ACH transfers with other banks. Many rewards checking accounts do also. I've always considered it one of the important features I look for whenever I'm opening any new bank account.

3
Comment #19 by paoli2 posted on
paoli2
Can someone answer a very important question for me to give me peace of mine about letting a cu like Penfed withdraw the needed funds from my checking account?  If I give them the routing and account number and they withdraw a chunk of money out of my checking to put into my Penfed Savings account for the CD purchases, what proof do I have that this was done for the CD purchase or that the funds will go into my Penfed account?  Maybe I am being a bit paranoid but I have never purchased CDs like this. Usually I have a check and/or a receipt to show what my money was used for on the same day it is being done.  In this case, we have to trust Penfed that our money will be used for the CDs and that we will get the certificates for proof quite some time later.  Has anyone ever had a problem getting CDs this way?   I guess the fact that the money will go into our Penfed savings and I can check that on the internet may give me some proof that my money is being used per my instructions.   One hears so much negative stuff about fraud these days, I guess I am being overly cautious. 

4
Comment #20 by Anonymous posted on
Anonymous
Observations...

If money is put into a long term IRA and one is (or close to 70 1/2) ask about distribution w/o any penalty...most will allow a mandatory distribution w/o same (and don't forget yearend Qualified Charitable Distributions for IRAs for 2013).  ACH transfers are done all the time for Treasury e-accounts and look at your checking account statement at the end of the month and notice "all" of the ACH transactions!  SOP today!

2
Comment #21 by Shorebreak posted on
Shorebreak
On Monday afternoon, online, I requested an ACH transfer of funds from my Ally Money Market Account to my PenFed Money Market Savings Account. The funds were available on Wednesday morning. At that time, online, I opened a 3-year PenFed Money Market Certificate account yielding 2.02%. The confirmation page was then printed out. Simple. On a previous occasion, I opened five PenFed Money Market Certificates at the same time over the phone. The funds were pulled from my Ally Money Market Account and deposited into my PenFed Savings Account. The Money Market Certificates were then immediately opened, with the account and confirmation numbers provided by the customer representative, and the accounts posted to my online PenFed page. I received the paperwork in the mail later. Everything was done in an efficient manner and have enjoyed being a member of PenFed for many years.

9
Comment #22 by paoli2 posted on
paoli2
Shorebreak:  Thanks for the info about how your CDs were handled by Penfed.  I asked about how they did it with withdrawing the needed funds from my local checking account and depositing into our Penfed Savings but they said they don't do it that way.  The rep said they would withdraw the funds while I was on the phone with them out of our local account and put them directly into each CD.  I would prefere them to do it the 2nd way you described but they must not do it like that for all CDs.  I guess it doesn't make a difference since the money will still go from our local account into the CDs as needed.  I just hope they keep the rates until the end of November as I was told.

5
Comment #23 by Shorebreak posted on
Shorebreak
The DA site is mentioned as the go-to place for the best deposit rates in a CBS Moneywatch article regarding the PenFed rate rise. Way to go Ken.

11
Comment #24 by Ken Tumin posted on
Ken Tumin
Thanks Shorebreak!

7
Comment #25 by mebarnes posted on
mebarnes
Thank you, Ken, for running this website so that there's a place for this kind of saver-helping-saver info to be shared. I have been a PenFed member for several years and have both a car loan and savings account with them, but had never opened a CD with them. Because of what I read here, I was in the middle of completing the paperwork on a 1.50% 3-yr certificate I opened in October when I saw your post on November 3 that the interest rate went up to 2.00%.  I called PenFed and they agreed to a "re-do" so my certificate is now earning 2.00%. Thank you, Ken, and the people who take the time to post timely news and share their knowledge on the forum you provide.

5
Comment #26 by Anonymous posted on
Anonymous
PenFed is no longer allowing opening new accounts Online. They want you to call in. Not sure if this is only a temporary issue. It has this msg - "Please call us at 800-247-5626 and one of our Member Service Representatives will be happy to take your application request over the phone."

1
Comment #27 by GBS (anonymous) posted on
GBS
I opened a PenFed account today online.  The savings account was very easy to establish.  I then got to work on the three year 2.02% certificate.  It showed me a $25K transfer limit, but when I called the customer support line, I was told this was bogus (my word, not hers).  The rep finished the certificate account set-up, and arranged for an ACH transfer from another bank.  It was one of the easier accounts I've set up. 

1