Hawaii Deposit Account Rates and Deals

Pentagon Federal Credit Union (PenFed) is yet another rate leader to make cuts to its CD rates. Economic data of a slowing economy and falling Treasury yields last month had pointed to a deposit rate environment that would become worse. Unfortunately, that did happen as we saw last week when several CD rate leaders including Alliant Credit Union, Melrose Credit Union, Ally Bank and Discover Bank reduced their CD rates. In this new month PenFed joins this group with its own CD rate cuts. Below are the new CD yields for September 2010. I've noted the old yields in parenthesis.

• 3.49% APY 7-year CD (was 3.75%)
• 2.75% APY 5-year CD (was 3.00%)
• 2.50% APY 4-year CD (was 2.78%)
• 2.00% APY 3-year CD (was 2.25%)
• 1.50% APY 2-year CD (was 1.75%)
• 1.26% APY 1-year CD (was 1.31%)

Minimum deposit is $1,000. The rates are also available in an IRA. These yields are listed in PenFed's Money Market Certificates page as of 9/01/2010. Even though PenFed typically maintains CD rates through the month, they no longer guarantee it.

Below is an updated early withdrawal yield table that shows approximate average yields you would receive if you close these CDs early. It allows you to determine if it makes more sense to buy a long-term CD rather than a short-term CD. I also included Ally Bank's 5-year CD which has a 2.74% APY as of 9/01/2010 with only a 60-day early withdrawal penalty.

Approximate Yields After Early Withdrawal Penalties

Year of Early Withdrawal	PenFed's 7-year 3.49% CD	PenFed's 5-year 2.75% CD	Ally's 5-year 2.74% CD
year 1	0.00%	1.38%	2.29%
year 2	1.75%	2.06%	2.51%
year 3	2.33%	2.29%	2.59%
year 4	2.62%	2.41%	2.63%
year 5	2.79%	2.75% (no penalty)	2.74% (no penalty)
year 6	2.91%	n/a	n/a

As you can see from the above table, if you think you're going to leave the CD untouched for at least 3 years, PenFed's 7-year CD is better than its other CD terms. Ally Bank is still the best deal if you think it's likely you'll break the CD before 4 years (either because you'll need the money or if interest rates shoot up). At year 4, PenFed's 7-year CD becomes the best deal. For more details about PenFed CDs, please refer to my PenFed CD review. For more details about Ally Bank's CDs and early withdrawal penalty, please refer to my Ally Bank CD review.

PenFed's Certificate Reservation Program

I logged into my PenFed account, and I checked the status of PenFed's certificate reservation program. I first reported on this program on August 19th. It allows select PenFed members to reserve CDs in January 2011. The best is a 5.00% APY 10-year CD. As I mentioned, I was informed that the program was only open to PenFed members who had CDs maturing in October. However, several readers who were not in the select group have commented in my post that they have been able to reserve these CDs online. I have not been able to find out if there's any chance that PenFed will not honor these reservations.

PenFed had allocated $240 million of funds for this program. As of this morning (9/01/10), there is $186.68 million left according to PenFed's Certificate Reservations page (available when you're logged in). I'm glad to see the funds are lasting. Perhaps most members are not jumping on this deal because they believe these CD terms are too long.

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 (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.

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 continue to be strong: 4 stars (excellent) at BauerFinancial, 4 stars (sound) at Bankrate.com and an overall health score of 4 out of 5 at DepositAccounts.com (see our financial overview of Pentagon FCU). These ratings are based on March 2010 data except for DepositAccounts.com which is based on June 2010 data. PenFed is one of the largest credit unions in the US with $14.33 billion in assets and $11.62 billion in deposits. It's federally insured by the NCUA (Charter # 227).

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:

• Best CD rates
• Best IRA CD rates

Pentagon Federal Credit Union came out with its August CD and IRA CD rates. Rates for most terms stayed the same. However, the 7-year CD rate increased from 3.51% APY to 3.75% APY which makes this one of the best nationwide CD rates. The 2-year CD rate also increased, but the new rate of 1.75% APY is still not a top rate. Minimum deposit is $1,000. These rates are listed in the PenFed's Money Market Certificates page as of 8/02/2010. PenFed typically maintains its CD rates through the month, but note that there's no guarantee.

The main downside with this 7-year CD is a hefty early withdrawal penalty. According to the CD application (disclosure on 2nd page), the early withdrawal penalty for the 7-year certificate is:

a) If redeemed within 365 days of the issue date or any renewal date, all dividends will be forfeited;
b) If redeemed thereafter, but prior to the maturity date, dividends for the most recent 365 days will be forfeited.

In short, the penalty is 1-year of interest for an early withdrawal after the first year. You lose all interest for an early withdrawal before the first year. The penalty for the shorter terms is only 180 days of interest.

Special Early Withdrawal Feature for PenFed IRA CDs

PenFed has a nice feature for its IRA CDs. If you have reached the age of 59½, you can avoid an early withdrawal penalty if you only take a partial withdrawal. A partial withdrawal just requires that you leave at least the minimum balance of $1,000 in the IRA CD. So for large IRA CDs, this effectively eliminates the early withdrawal penalty. I described the details of this feature in this PenFed IRA CD review.

Do Long-Term CDs Make Sense?

It might seem unwise to lock into a long-term CD when rates are so low. If rates do go up in the next year or two, you may be able to get much higher rates. So it may seem better to stay in a savings account or short-term CDs until rates improve. The risk is that if rates don't go up, you'll earn much less interest than what you could have earned with the long-term CD. You also have to take into account the early withdrawal penalty. If rates go up substantially, you can break the CD with the early withdrawal penalty and reinvest the money into higher paying accounts. You could make more money in this approach than you could if you kept your money in a savings account or short-term CDs.

Below is a comparison of the approximate annualized yields that would result if you closed PenFed's 7-year CD at year 1, 2 and up to year 6. The yield is approximated by removing one year of interest and then computing the new effective average yield for that time period. The yield at year 2 is easy to compute since you essentially cut the amount of interest that you earn in half. So you just divide 3.75% by 2 which is approximately 1.88% APY. As you can see, this is a pretty competitive yield for 2-year CDs.

For comparison, I included PenFed's 5-year CD and Ally Bank's 5-year CD. PenFed's 5-year CD's early withdrawal penalty is 180 days of interest (only half of the 7-year CD penalty). Ally Bank's 5-year CD has only a 60-day interest penalty. The rates are as of 8/02/2010.

Average Yields After Early Withdrawal Penalties

Year of Early Withdrawal	PenFed's 7-year 3.75% CD	PenFed's 5-year 3.00% CD	Ally's 5-year 2.94% CD
year 1	0.00%	1.50%	2.46%
year 2	1.88%	2.25%	2.70%
year 3	2.50%	2.50%	2.78%
year 4	2.81%	2.63%	2.82%
year 5	3.00%	n/a	n/a
year 6	3.13%	n/a	n/a

As you can see in the table above, you will earn more with the 5-year CDs if you take an early withdrawal before 3 years. After 3 years, the 7-year CD starts to outperform the PenFed 5-year CD, and after 4 years, the 7-year CD starts to outperform Ally's 5-year CD. Fore more details about Ally Bank's CDs and early withdrawal penalty, please refer to my Ally Bank 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 (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.

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 continue to be strong: 4 stars (excellent) at BauerFinancial, 4 stars (sound) at Bankrate.com and an overall health score of 4 out of 5 at DepositAccounts.com (see our financial overview of Pentagon FCU). PenFed is one of the largest credit unions in the US with $14.2 billion in assets and $11.51 billion in deposits. It's federally insured by the NCUA (Charter # 227).

Hawaii Pacific Federal Credit Union is one of the few institutions in Hawaii that's offering a reward checking account. It's called the Check Plus Account, and it pays 3.00% APY on all balances as of 7/26/2010 if 12 debit MasterCard purchases per month are made. I don't see any direct deposit requirement. There are some additional minor requirements which are typical: valid email address and online banking access. If the 12 debit card purchases are not done, no interest is earned for the month. The account has no monthly balance requirement and no monthly service charge. One downside is that there are no ATM fee refunds. However, they claim to be part of Hawaii's largest ATM network.

Membership is primarily based on select employer groups. Please refer to the credit union's How to Join page for the full details.

Branches are located in Honolulu, Hawaii.

The credit union's ratings for safety and soundness are a little above average: 4 stars (excellent) at BauerFinancial, 3 stars (performing) at Bankrate.com and an overall health score of 3 out of 5 at DepositAccounts.com (see our financial overview of Hawaii Pacific FCU). Ratings are based on March 2010 data. The credit union is federally insured by the NCUA (Charter # 4676).

Other High-Yield Reward Checking Accounts

Please refer to the reward checking section of DepositAccounts.com to find reward checking accounts in your state or that are available nationwide.

HomeStreet Bank has brought back its $215 checking account promotion that I last reported on in July 2009. The bonuses amounts appear to be the same as before. The largest bonus is for direct deposit, but you can still make $135 without it. Details are listed in the bank's promotion page as of 1/21/2010. I don't see any expiration date, but based on its history, the promo comes and goes. The following activities are required to receive the full $215:

• $80 for direct deposits of payroll, pension, social security or other income to your account
• $60 for using your new Visa Check card ($2 per purchase up to $60)
• $40 for using free Online Bill Pay ($10 per payment up to $40)
• $10 for receiving e-statements
• $25 for giving the bank your old checks and debit card from your old bank ($15 for your check card and $2 per pad of checks up to $10).

Some important small print of the offer includes:

• Minimum opening deposit for the checking account is $100
• The Totally Free Checking qualifies
• All transactions eligible for a bonus payment must be made within the first 3 statement cycles after account opening
• Offer is limited to one account per household
• Accounts closed by the customer within 90 days of opening are subject to a $15 early closure fee

One nice change for 2010 is that they doubled their refer-a-friend promotion. When you refer a friend who opens a checking account, both you and your friend will earn $50 (Update: Looks like only the person who refers the new customer makes the $50) There's no limit on the number of referrals you can make.

When I posted on this promotion last year, a reader mentioned being told by the CSR that there is no hard credit inquiry.

It appears a branch visit is required for this promotion. Branches are located in Washington State, Oregon and Hawaii. The bank is a member FDIC (FDIC Certificate # 32489). Update: HomeStreet Bank has been operating under a FDIC Cease & Desist order since May 2009.

I received info from PenFed contact yesterday concerning January CD rollovers. The good news is that those who participated in the November Certificate Reservation program will have the advertised rates honored (3.50% 3 years, 4.00% 4 years and 4.25% 7 years). Several readers in my previous PenFed post have also confirmed the same thing. However, those who missed the November Certificate Reservation program won't be getting those top rates. It appears that the interest rate environment was turning out to be worse than what they had expected. Below are the details that I received:

At the December meeting, our Board of Director approved lower Money Market & IRA Certificate rates for January 2010 than previously announced. We became aware of the change in rates on December 29. It is very rare for the Board of Directors to make a change in the rates after we project them, but in this case; other factors in the market forced us to lower our projected rates slightly.

As indicated in all of our disclosure statements, our rates are always subject to change. Below, I have provided a few key points regarding the rates along with a January 2010 rate chart.

* All members who participated in the CD Rollover Subscription program will have their reservations honored, and they will receive the advertised rate from that promotion: 3 yr/3.50%, 5 yr/4:00% and 7 yr/4.25

* With the exception of CD Rollover Subscription enrollees that will receive the promised CD Rollover Subscription rates, the 0.25% APY certificate rollover bonus will be applied to all qualifying certificates rolling over between December 29, 2009 and February 1, 2010, inclusive. These certificates will receive the "Rollover " rates reflected in the chart below. Update 1/06/09: I received a clarification about the below rates. For those members with CDs maturing December 29-31, 2009 and February 1, 2010 (and did not participate in the CD Reservation program), and wish to rollover, they will receive the rate in effect for that month - plus the 0.25% bonus.

        APY for
CD      CD Subscription  APY for    APY for
Term    Participants     Rollovers  New Money
----    ---------------  ---------  ---------
6 mo    -                1.00%      1.00%
1 yr    -                1.25%      1.25%
2 yr    -                1.75%      1.75%
3 yr    3.50%            3.25%      3.00%
4 yr    -                3.50%      3.25%
5 yr    4.00%            3.75%      3.50%
7 yr    4.25%            4.00%      3.75%

For more details about PenFed CDs and membership, please refer to my previous PenFed post.

Other Competitive Certificate of Deposit Rates

• CD rates at DepositAccounts.com
• My weekly list of hot nationwide and local CD deals

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).

Update 11/14/09: The rates have fallen, but they remain very competitive. Please refer to the credit union's website for the latest rates.

Wings Financial Credit Union continues to offer several very competitive CD rates. In addition, they have expanded their field of membership beyond just the airline industry to include all those who live or work in the Minneapolis/St. Paul metro area.

The special 27-month CD and all of their standard CDs have competitive rates. Minimum deposit is $500. These are also available in an IRA. Below is the full list of CD rates as shown on the credit union's rate sheet as of 11/03/2009:

• 1.96% APY 3 month
• 2.37% APY 6 month
• 2.78% APY 1 year
• 2.98% APY 2 year
• 3.09% APY 27 month (special)
• 3.14% APY 3 year
• 3.24% APY 4 year
• 3.49% APY 5 year

Another good deal is the credit union's Wings Investment Money Market Account. It's a tiered rate account with a 1.92% APY for balances of $5K to $50K, 2.07% APY for balances of $50K to $100K and 2.22% APY for over $100K. These rates are listed as of 11/03/09.

The expanded field of membership just occurred last month. In addition to those connected to the airline industry, those who live or work in the 13 County Minneapolis/St. Paul Metro are eligible for membership. Refer to the credit union's Membership Eligibility page for the full details.

Branches are located in California, Florida, Georgia, Hawaii, Michigan, Minnesota, Tennessee and Washington.

The credit union's ratings for safety and soundess are above average: 5 stars (superior) at BauerFinancial and 3 stars (performing) at Bankrate.com. Both ratings are based on 6/30/09 financial data.

Wings Financial is a large credit union with $2.2 billion in assets and 122,394 members. It's federally in insured by the NCUA (Charter # 68601). Note, Wings' charter number has changed now that it's a state charter.

Other Competitive Certificate of Deposit Rates

• My weekly list of hot nationwide and local CD deals
• My weekly list of all nationwide CD deals
• Index of state CD and bank deals

Wings Financial Credit Union is offering several very competitive CD rates. They have two CD specials which include a 2.17% APY 5-month CD and a 3.09% APY 27-month CD. The credit union's regular share certificate rates are also competitive. These include a 2.38% APY 6-month CD, a 2.78% APY 1-year CD and a 3.49% APY 5-year CD. Minimum deposit is $500, and these are available as both regular and IRA share certificates.

Another good deal is the credit union's Wings Investment Money Market Account. It's a tiered rate account with a 1.92% APY for balances of $5K to $50K, 2.07% APY for balances of $50K to $100K and 2.22% APY for over $100K.

The above rates are listed in the credit union's savings rates sheet as of 10/02/09.

The downside to Wings is that membership is primarily limited to the air transportation industry. Please refer to the credit union membership eligibility page for the full details. (see note below)

Branches are located in California, Georgia, Hawaii, Michigan, Minnesota, Tennessee and Washington.

The credit union's ratings for safety and soundess are above average: 5 stars (superior) at BauerFinancial (based on 6/30/09 data) and 3 stars (performing) at Bankrate.com (based on 3/31/09 data).

Wings Financial is a large credit union with $2.1 billion in assets and 122,278 members. It's federally in insured by the NCUA (Charter # 24351).

Field of Membership is Expanding

Wings Financial just announced it will be expanding the field of membership. According to the credit union's bulletin, members voted to change the charter from a federal to a Minnesota state. This will allow Wings to expand the field of membership to include anyone living, working or worshipping in the 13 county Minneapolis/St. Paul metro area. The bulletin gives no date of when this new FOM will take effect. Unfortunately, they didn't add an easy-to-join association to their FOM.

Thanks to the reader who emailed me info on these rates and this FOM change.

Other Competitive Certificate of Deposit Rates

• My weekly list of hot nationwide and local CD deals
• My weekly list of all nationwide CD deals
• Index of state CD and bank deals

HomeStreet Bank is again offering a few good CD and IRA deals. The most competitive as listed at the bank's CD page as of 7/15/09 include:

• 2.35% APY 12-month CD
• 2.55% APY 18-month Featured CD
• 2.85% APY 24-month CD
• 3.55% APY 60-month CD

Minimum deposit is $10,000. CDs with lower minimums and rates are also available. Note, you have to enter your zip code to see the rates. I used a Seattle and Portland zip code. For Hawaii zip codes, the rates are lower.

The bank continues to offer a checking account promotion in which you can earn up to $215 (see post). This is scheduled to end in September.

It appears a branch visit is required to open an account. Branches are located in Washington State, Oregon and Hawaii.

HomeStreet Bank's ratings for safety and soundness have fallen. At BauerFinancial the rating fell from 3½ stars based on 12/31/08 data to 2 stars (problematic) based on 3/31/09 data. At Bankrate.com the rating fell from 3 stars to 1 star (lowest) based on data from the same dates as above. As I recommend with any bank, it's best to stay below the FDIC limits. The bank has been a FDIC member since 1986 (FDIC Certificate # 32489).

Finding the Best Certificate of Deposit Rates

• My weekly list of hot nationwide and local CD deals
• My weekly list of all nationwide CD deals
• Index of state CD and bank deals

Update 10/18/09: This promotion continues to be listed at the bank's website with no expiration date mentioned.

HomeStreet Bank has again extended its $215 checking account promotion that I last reported on in April. They did make some changes. The bonus amounts for the different activities have changed a little. They offer a little more for direct deposit and bill pay, but less for the Visa check card purchases. Details are listed in the bank's promotion page. The offer is scheduled to last through 9/30/09. The following activities are required to receive the full $215:

• $80 for direct deposits of payroll, pension, social security or other income to your account
• $60 for using your new Visa Check card ($2 per purchase up to $60)
• $40 for using free Online Bill Pay ($10 per payment up to $40)
• $10 for receiving e-statements
• $25 for giving the bank your old checks and debit card from your old bank ($15 for your check card and $2 per pad of checks up to $10).

Some important small print of the offer includes:

• Minimum opening deposit for the checking account is $100
• The Totally Free Checking qualifies
• All transactions eligible for a bonus payment must be made within the first 3 statement cycles after account opening
• Offer is limited to one account per household
• Accounts closed by the customer within 90 days of opening are subject to a $15 early closure fee

When I posted on this promotion last year, a reader mentioned being told by the CSR that there is no hard credit inquiry. Another reader in my April post mentioned that he was also able to qualify for an extra $25 for a refer-a-friend bonus.

It appears a branch visit is required for this promotion. Branches are located in Washington State, Oregon and Hawaii. The bank is a member FDIC (FDIC Certificate # 32489).