Dedicated to Deposits: Deals, Data, and Discussion

Happy New Year! PenFed Continues Its Top CD Rates

POSTED ON BY

Pentagon Federal Credit Union

This is just a quick note to wish you and your family a happy, healthy and prosperous New Year. I would like to thank all of you for your support.

I’m happy to report that PenFed has extended December’s CD rates into January. Apparently, PenFed’s board of directors voted to continue the December rates through January. So if you had to wait for a CD to mature in January, you should be able to take advantage of these top rates. Don’t forget that PenFed doesn’t guarantee that the CD rates will last for the whole month, but PenFed has a long history of not dropping rates before the end of the month.

Many readers have opened the PenFed CDs. In my last PenFed post, I included a poll asking readers how much they have put into PenFed CDs in December. For the 325 people who voted, 65% voted that they have invested at least $20K. That comes out to 211 people. Using the poll results, I did a quick estimate of the total deposits DA readers have invested in December PenFed CDs. My estimate is $80 million. Fortunately, PenFed is a large credit union with over $12 billion in deposits. So $80 million is less than 1% of PenFed’s total deposits.

For more information on these PenFed CDs, please refer to my posts, Four Important Points about PenFed’s CDs and IRA CDs and PenFed Comes Through With New Top CD Rates.

  Tags: Pentagon Federal Credit Union, CD rates

Related Posts

Comments
17 comments.
Comment #1 by georgeoftexas (anonymous) posted on
georgeoftexas
You gotta love em, that is until they drop  their rates.  Quick note:  10 year treasury closed at 3.03% yesterday.  Problem with that though is that not many traders were doing business yesterday.  We'll have to wait till thursday, or even possibly monday to find out what the 10 year will do.  Reason for my comment:  it's still the benchmark for mortgages and other debt and also strongly influences the 5 year CD.

6
Comment #2 by Anonymous posted on
Anonymous
Let's hope 2014 brings higher rates!

10
Comment #3 by Anonymous posted on
Anonymous
The time lag between Treasury rate increases and Bank CD rates seems to be forever. Significant Treasury rate increases in the past months have not led to corresponding CD rate increases. Even brokered CDs show little effect, rising only about .0015 in many months. The highest newly listed brokered CD is a 15-year at 3.7%, which is only .1% of what was offered for this term 3 months ago. The PenFed deal has more to do with their own internal finances (which are probably quite good) and large customer loan base than any Treasury rate changes. I don't expect higher CD rates anytime soon, which is why special deals like PenFed's should be jumped on ASAP.

10
Comment #5 by decades posted on
decades
was thinking same thing... I have a brother in Arlington VA...adjacent to DC...the area is booming with the ever expanding federal government ... Penfed is booming

7
Comment #6 by Anonymous posted on
Anonymous
You got it right.  Bernanke is using Penfed to obtain funding for the government.

3
Comment #8 by Anonymous posted on
Anonymous
I agree the Federal government is blossoming.  What you failed to mention is that the Federal government's growth comes purely at our expense.  They expand as we shrivel and die.

7
Comment #9 by Anonymous posted on
Anonymous
#8  What I stated was Bernanke is obtaining the funding from Penfed.  And where do you think Penfed is obtaining their money from?  duh....US

2
Comment #11 by Anonymous posted on
Anonymous
Penfed pays 3% rate on certificates and the higher income taxpayers pay back 3.8% tax rate on the interest earned ont the certificate. 

2
Comment #12 by Anonymous posted on
Anonymous
It still leaves them with a gain of 96.2% gain on their interest.

That's according to your figures.  But actually they pay way more than 3.8% tax rate.  I wish it were only 3.8% tax.

3
Comment #24 by Anonymous posted on
Anonymous
Have you considered tax free municipals? Is the income from tax free municipals included when figuring the additional 3.8% tax rate on investment income?

1
Comment #4 by Anonymous posted on
Anonymous
I think that with so many of the 6.25% CD's that are maturing this month and for the next few months the 3% can't hurt them that much. 

11
Comment #19 by Anonymous posted on
Anonymous
They could have offered a rate like 2.5% and got the same results.  Why are they almost 1% higher than the next closest institution in this rate environment?  Makes one think.  Maybe they are having problems?  If they run into problems and need the NUCA to take over the 3% CD's are gone. 

3
Comment #21 by Anonymous posted on
Anonymous
Maybe the other guys are just greedy.

8
Comment #7 by Anonymous posted on
Anonymous
I'm quite surprised they are going the extra month.  I did a quick 1/4 mil (5 x 50k) at the front end of the deal.  It was convenient not having to deal with trust accounts, beneficiaries, and so forth.  The interest is withdrawn monthly so I do have a small amount of uninsured exposure depending on time of the month.  I can live with it.  To do more at this point would mean a trust account.  Guess I'll pass.  It's not really worth the hassle.  

5
Comment #13 by Anonymous posted on
Anonymous
Not a pain at all dealing with beneficiaries, joint accounts, etc. at PenFed.  Their is a pain the "wallet" when initially setting up trust accounts due to outrageous lawyers fees.  But that has nothing to do with PenFed.

When figuring uninsured assets, it's not a question of what you can live with.  It's a question of what you can live without.

4
Comment #14 by Anonymous posted on
Anonymous
It appears that Penfed does not offer the option of designating beneficiaries with joint accounts,only individually held accounts. Strange.

1
Comment #15 by paoli2 posted on
paoli2
#14  There seems to be a confusion about this.  Penfed does allow a beneficiary on Joint accounts.  I have my daughter as beneficiary on all of our joint accounts and the rep assured me it was allowed when I rechecked about it.

7
Comment #16 by Anonymous posted on
Anonymous
paoli,  hows the max Insurance work oh this?  250,000 or, 500,000?

1
Comment #18 by Anonymous posted on
Anonymous
So per the links you provided:  Joint accounts are NOT allowed to have a beneficiary.

2
Comment #27 by Shorebreak posted on
Shorebreak
PenFed states on it's home page "This credit union is federally insured by the National Credit Union Administration." Therefore, they must strictly follow the NCUA guidelines. Here is a chart that may be helpful regarding NCUA Insurance. Not being interested in joint accounts with beneficiaries I "don't have a dog in the hunt" regarding this.

https://www.dcu.org/streetwise/howto/ncua.html
 

3
Comment #20 by Anonymous posted on
Anonymous
I hope that $250,000 you invested isn't all your savings.  I would keep some powder dry.  WHo knows what will happen to rates in the coming years

2
Comment #22 by Anonymous posted on
Anonymous
People, stop procrastinating, the interest rates are set by FDIC, who gets the OK from the FRDs (Bernanke and or Yellen), will make sure that they will stay very low and are de-coupled from the treasury.

3
Comment #38 by Anonymous posted on
Anonymous
Penfed is a Credit Union so the FDIC does not apply.

4
Comment #23 by Anonymous posted on
Anonymous
Shorebreak, the links you posted confirm that joint accounts cannot have beneficiaries:
'Joint accounts are owned by two or more people who have
equal rights to withdraw money from the account and no
beneficiaries are named. These accounts can include regular
shares, share drafts (similar to checking), money market
accounts, and share certificates. The NCUSIF provides
each joint account holder with $250,000 coverage for their
aggregate interests at each federally insured credit union.'

3
Comment #25 by linmarie posted on
linmarie
I just went to join PenFed and I would have to join through "another way".  It states "The non-refundable dues to join either association and thus become a PenFed member doesn’t guarantee you will be approved for any requested PenFed account, loan, or service."  Has anyone had a problem getting the 3% cds?    I would also like to know how to publish a new post on the forum page.  I missed that somewhere.  Thanks

1
Comment #26 by Ratesaver posted on
Ratesaver
Has anyone found out how long Pen Fed is going to this 3% cd.  I have a cd coming due soon so I am hoping to get one anyway.  I don't live far from the NY branch and will drive up... 

1
Comment #28 by scottj posted on
scottj
I have 2 CDs from another bank coming due next week and since Penfed still has this rate will probably put some there, just want to make sure I'm insured. I'm maxed out now with the 5% 10 year CD, that CD is in my living trust name in which I'm the trustee of, I don't think that is the same thing as a trust or pod account, those must have listed beneficiaries. My plan is to now open new one just under my name, since I have a pour over clause in my will anything not in the trust at the time of my death will go to the trust but will have to go through probate first. Going to call and see if I can get someone there who understands this stuff to make sure everything gets titled correctly. Online and on my statements it makes no mention of trust which has me a little worried but I have called and they tell me is in trust name, wonder if I could get them to send me something showing that?

2
Comment #29 by Anonymous posted on
Anonymous
Paoli In case you missed the post:

"Shorebreak, the links you posted confirm that joint accounts cannot have beneficiaries:
'Joint accounts are owned by two or more people who have equal rights to withdraw money from the account and no beneficiaries are named. These accounts can include regular shares, share drafts (similar to checking), money market accounts, and share certificates. The NCUSIF provides each joint account holder with $250,000 coverage for their aggregate interests at each federally insured credit union.'"

1
Comment #30 by paoli2 posted on
paoli2
#29  Why don't you call Penfed and get it from the horse's mouth. I was told by more than one rep that ALL my joint account CDs have my daughter as beneficiary now and it IS allowed.  Instead of taking what Shorebreak posted as law, why don't you call Penfed yourself. Either that or the email I got this week is lying to me and the reps are really off the wall.  The beneficiary thing is what I have been waiting to be done all these months.  I have the email to prove that my joint accounts have a beneficiary now.

2
Comment #31 by paoli2 posted on
paoli2
BTW, DCU will not allow beneficiaries on joint accounts but unless Penfed is not training their reps correctly, they are being told to tell customers they "can" have a beneficiary.  Maybe they don't know the rules Shorebreak is posting and someone should call them about this.

1
Comment #32 by paoli2 posted on
paoli2
Where does it state on Shorebreak's link that Joint accounts can't have a beneficiary?  I can find nothing about that in the link.  I would like to know so if I call them about my beneficiary I can refer them to what I am calling about.  Thanks!

1
Comment #34 by Shorebreak posted on
Shorebreak
"Instead of taking what Shorebreak posted as law..."

I didn't post anything "as law". Just what the NCUA posts as their rules. Stop jumping on the messenger here. If you have a gripe, take it up with PenFed or the NCUA.

6
Comment #36 by Anonymous posted on
Anonymous
Paoli,

Go to this NCUA calculator that calculates the insured amount.  The only option you can select for joint accounts is joint accounts with no beneficiaries.  The reason for this is because you are not allowed to list beneficiaries on joint accounts.  The same situation exists at the FDIC also.  However; a joint account with two owners is insured for $250K for each owner (a total of $500K).
http://webapps.ncua.gov/ins/

4
Comment #37 by paoli2 posted on
paoli2
I am not concerned with the insurance for the beneficiary.  She will automatically get insured if we are demised when the CD goes to her.  So what is the big deal about not being able to have a beneficiary.  I have emailed the NCUA and will see what they say.  This makes no sense to me and if Penfed is giving me incorrect info again, it is aggravating me even more.  I trusted them to know what they were doing when I bought those CDs.

1
Comment #39 by Anonymous posted on
Anonymous
!)  If you and your DP demised,  your daughter will have a total of 250,000 insurance coverage.

2) You need to be concerned how much your accounts are covered while your living.

2
Comment #42 by paoli2 posted on
paoli2
This is why I am careful of how much I put in Penfed overall.  If it does pass to my daughter, I want to make sure she has enough insurance for one person.  I also have made sure DP and I are adequately insured.

2
Comment #40 by Anonymous posted on
Anonymous
Just be aware that joint ownership means that either owner has the right to do whatever he or she desires with the account. 

2
Comment #41 by Anonymous posted on
Anonymous
I don't believe Bank/CU employees are knowledgable about the FDIC or NUCA insurance rules.  I was told the incorrect information by a Branch manager about POD accounts.  After the bank getting their lawyers involved with the FDIC/NCUA the decrepancy was acknowledged and changed in the FDIC/NCUA rules.

5
Comment #59 by paoli2 posted on
paoli2
#36 from my reply from the NCUA rep, I would gather one would select the "In Trust for, Payable on Death" etc. title to figure out the insurance.  He says if they see a beneficiary any place on the CD, it is considered that type of account.  So you would not select the "Joint" title if you have the beneficiary.

1
Comment #43 by Ally posted on
Ally
When you have a joint account with one beneficiary you are insured to $500,000. It is insured by joint owner 1 has $250,000 on beneficiary and joint owner 2 has $250,000 on beneficiary. If you have an IRA it is only insured to $250,000 no matter how many beneficiaries you have. If you have a joint account with 2 beneficiaries-joint owner 1 has $250,000 on each beneficiary and joint owner 2 has $250,000 on each beneficiary. So you would have insurance for 1 million. 

9
Comment #44 by paoli2 posted on
paoli2
I think the NCUA doesn't have a listing for Joint Owners with beneficiary because the beneficiary doesn't get extra insurance.  The only way the beneficiary comes into play with the CD is if the joint owners are demised so the beneficiary is not a factor for insurance until this point.  I will see what NCUA advises me tomorrow by email or phone.  I will get the answer to this since it is very important to me.  Frankly, I don't think having a beneficiary increases the insurance for the CD.  If it is joint one would get the $500,000 insurance coverage even if you didn't have a beneficiary.

1
Comment #45 by Anonymous posted on
Anonymous
Exactly!  Good to see somebody else knows what is correct.  I also knew that as fact but didn't want to join in the usual fray between a few regular posters that like to argue all the time.

4
Comment #46 by Anonymous posted on
Anonymous
Just for clarification, my comment #45 was in reference to Ally's comment #43.

1
Comment #48 by lou posted on
lou
Ally (#43) is correct with her example of joint accounts with beneficiaries

2
Comment #47 by Anonymous posted on
Anonymous
#43 ally - Where is this documented in the FDIC or NUCA  documents?

2
Comment #49 by Anonymous posted on
Anonymous
number 43 Ally is correct. You can just go to the FDIC EDIE Calculator to confirm (same rules apply for NCUA). basically, joint account with or without a single POD beneficiary is insured for 500,000. A joint account with two beneficiaries would be insured for 1 million. to stretch things out, a family of four could theoretically have 2.5 million insured at a single bank by using a combination of A joint account, living trust account, and two single owner account types!

5
Comment #50 by Ally posted on
Ally
3
Comment #52 by paoli2 posted on
paoli2
I just got off the phone with a gentleman from NCUA .  He says Joint Accounts can definitely have a beneficiary and the account would be insured for $500,000.00 with one beneficiary.  He is sending me a booklet in the mail which gives this information.  I have a feeling it is the same one Ally has posted in the link above. 

3
Comment #54 by Anonymous posted on
Anonymous
paoli,  Did you ask him why the ncua insurance estimator does't allow for this setup?

1
Comment #56 by Anonymous posted on
Anonymous
Thanks #50.  So the comments from #36 and #43 are both correct.  The joint arrangement with beneficiaries (2 owners and 2 beneficiaries) that #43 describes is what the NCUA describes as a Joint "In Trust For / Payable On Death" account.

5
Comment #51 by Ally posted on
Ally
A few credit unions do not allow beneficiaries but you can have a POD or Totten Trust account that does the same thing as having beneficiaries. Some allow a even split of the money or a different % of the money for each beneficiary upon death. 

1
Comment #55 by Anonymous posted on
Anonymous
Ally,  So your basically telling me, credit unions can "Pick and Choose" what NCUA rules they want to comply with.  This really sounds very "niave".

1
Comment #62 by Ally posted on
Ally
No the NCUA now recognizes that once a beneficiary is on an account it does not have to be listed as Totten Trust or POD in the title. FDIC STILL DOES REQUIRE POD or ITF IN THE TITLE the last time I purchased a CD from a bank for the extra insurance. I had a note from NCUA that they no longer require a Totten Trust or POD  but if a beneficiary was in the CREDIT UNIONS DOCUMENTS you would be entitled to the extra insurance. They said that when and if Congress gets around to it that NCUA and FDIC will have the same rules regarding beneficiaries. TO BE TRUELY ACCURATE THE NCUA DOCUMENTS REQUIRE IT, BUT THEY ARE NOT ENFORCING IT.  Things really got complicated with all the bank and credit union closings when people thought they had beneficiaries, banks were buying one another a lot in the years before 2008, records were lost etc. That is why I have copies of all CD's with the beneficiaries listed on each CD or a letterhead letter from the institution listing all the account numbers and the beneficiaries. 

4
Comment #57 by Anonymous posted on
Anonymous
Thanks for the continued postings on the continuance of the Pen Fed rate. Ths was very helpful for me to move expiring CD's to PenFed. Since they only allowed a $25k cap on electronic transfer to open an account, I had to open multiples and fill out more paper forms than I would have liked to. However this is a very minor inconvenience for this great rate! I now have 8 CD's with PenFed in the past two weeks. As well, they are Joint, and we have a beneficiary. I don't care about the additional beneficiary insurance, just want to make sure if my benefciary needed to step in to get the $, it's easy, without lawyers and courts involved. I have the paperwork showing these are joint accounts, with a beneficiary, it's printed on my paper docs.

4
Comment #58 by paoli2 posted on
paoli2
I was concerned that the manual Ally posted referred to beneficiaries as their POD accounts and asked the NCUA if the CD only had "beneficiary" by the name was it still considered the same as POD.  He said as long as there is a name which is listed as beneficiary someplace on the CD, it doesn't have to state POD since it is considered to them as one and the same type of account.

2
Comment #60 by Anonymous posted on
Anonymous
Paoli,  Now since you have determined your accounts to be "POD" accounts with 2 co-owners, and 1 beneficiary, what happens if only 1 co-owner passes away.  Who receives their share of the funds?  The beneficary or the other co-owner?

2
Comment #61 by paoli2 posted on
paoli2
#60  It's simple.  The beneficiary "only" gets control of the account after "both" joint owners pass.  So if Joint #1 goes bye bye first, it all goes to #2 and hopefully he or she will keep the same beneficiary or be hunted by #1 if she is "me".  After #2 flies away, the entire amount or what is left in the account goes to the beneficiary to do with as she/he may.  Always keep in mine that a beneficiary has no control over the funds until all of the Joints are gone. 
BTW I was on the phone with DCU earlier and asked what were my options for a beneficiary since they do not allow them except on Totten Trusts.  I was advised why not just put them on as another Joint and just don't tell them about the accounts so they can't access them until you are gone.  I do not like hiding things from my DD and have spent a lot of time typing up the info she needs and where the institutions are that she is listed as a beneficiary.  Does he expect me to just pin a note to my chest as I am passing away revealing any other banks or cus she was joint on all these years??  Not something I could do.  There are other reasons I cannot make her joint on any CDs but that is not his business.  If I do anything with DCU in that area, it will have to end up being a Totten Trust.

2
Comment #63 by Anonymous posted on
Anonymous
#61  Check if a fault in your logic may lie with the account not being "joint with survivorship".  The owners are co-owners not joint "with survivorship"  So when one co-owner goes "by-by" his share goes wherever he has indicated (in this case the beneficiary) 

2
Comment #64 by paoli2 posted on
paoli2
#63  There is no fault with my logic.  DP knows how I expect things to be handled with any CDs if I go "bye bye" first and if he crosses me, I "will" hunt him!  What's the matter?  You don't believe in angry ghosts?

3
Comment #65 by paoli2 posted on
paoli2
Guess what?  I got all 5 of my Penfed CDs in the mail today listing my daughter finally as beneficiary!!!  I am so glad this can now be put to rest.  They typed all new CDs for me with the info I wanted on it.  Maybe that is why it took so long but no more hard feelings for Penfed.  I will go to that Survey they sent me asking my opinion of their customer service and can finally give them a gooood rating.  "All things come to those who Wait, and Wait, and Wait! :)

3