AgFed Credit Union 30-Month No Penalty CD Returns
UPDATE 9/20/17: The 30-Month No Penalty CD has ended and is no longer available effective 9/20/17.
In March 2017, AgFed Credit Union (AgFed) brought back its 30-month No Penalty Certificate for a limited time. AgFed is again offering the No Penalty Certificate (1.85% APY), with a rate 30 bps higher than the March offering. As before, this is a limited-time offer that requires new money. The minimum opening deposit is $1k, with no stated balance cap. According to the promotion page, dividends will be paid quarterly.
The 30-month No Penalty Certificate offers a one-time withdrawal (partial or complete) without incurring a penalty. According to Truth-in-Savings disclosure:
One withdrawal may be made during the original term of the certificate with no penalty imposed. Subsequent early withdrawals may be subject to a penalty as outlined in the Early Withdrawal Penalties disclosure.
If subsequent withdrawals are made, the following applies:
If the certificate term is greater than 11 months but less than 60 months, the member shall forfeit an amount equal to the lesser of: (A) All dividends for 180 days on the amount withdrawn, or (B) All dividends on the amount withdrawn since the date of issuance or renewal.
Thanks to DA reader, zz, for a Forum post about the No Penalty Certificate.
Also thanks to DA reader, rhutnik, who provided the information in the Forum post about opening and closing the No Penalty Certificate. Below are excerpts:
In terms of opening the CDs or other products, once the first membership/product is opened, a member can open up "99 total accounts" in the life of the membership. Each product opening will be processed separately and must have a separate application through the website.
In terms of closing the CDs (especially for the single No-Penalty withdrawal of either part or all of balance), they need a request in writing either mailed to their PO Box address or sent through their secure online messaging system. The balance plus accrued interest can be sent either to your savings/checking account with them or to another external bank account.
I’ve also talked with an AgFed representative, and the above information is consistent with what I’ve been told.
Availability
Headquartered in Washington, D.C., AgFed Credit Union’s field of membership (FOM) is wide, allowing almost anyone legally residing in the U.S. to join:
Easy Membership: Members of The Friends of the National Zoo or The Friends of the National Arboretum (one-time $20 donation) are eligible for membership. Joining either association and applying for AgFed membership can be done simultaneously, using the Credit Union’s online application.
Residency: Individuals who live, work, worship, or attend school in the District of Columbia also qualify for membership.
Employment/Affiliation: Any current or retired employee or member of more than 65 Select Employee Groups and organizations are eligible to join.
Family Relationship: Any person related by blood, adoption, or marriage to a member (except relatives of members who have been expelled from the Credit Union) are membership eligible.
Joining AgFed and opening a No Penalty Certificate can be done online, by phone (800.368.3552), or at any of five full-service branches located in Washington, D.C. (3), Riverdale (MD) and Alexandria (VA).
Credit Union Overview
AgFed Credit Union has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 6.48% (excellent) based on June 30, 2017 data. In the past year, AgFed has increased its total non-brokered deposits by $13.36 million, an excellent annual growth rate of 5.62%. Please refer to our financial overview of AgFed Credit Union (NCUA Charter # 16400) for more details.
Originally established as the Agriculture Federal Credit Union in 1934 by United States Department of Agriculture, AgFed Credit Union currently has more than 24,100 members and assets in excess of $286 million. In January 2017, the NARC Federal Credit Union membership approved a merger with AgFed; that merger will be completed on October 1, 2017.
How the No Penalty Certificate Compares
When compared to CDs with similar terms, the No Penalty CD’s APY isn’t anything to get excited about. In fact, the 1.85% APY is 20 bps lower than the current top nationally available 30-month term rate and 32 bps lower than the current top nationally available 36-month term rate. The appeal of the Certificate is the no-penalty feature, making the No Penalty Certificate more like a Savings or Money Market account. It can serve as a convenient place to hold funds while you wait for those 3% CDs.
Unfortunately, there aren’t many No Penalty CDs. Two internet banks do offer No Penalty CDs, but their terms are only 11 months. Due to the no-penalty feature, a longer term is only a benefit. If rates go down, you can decide to keep the CD. Below is a comparison of AgFed’s No Penalty Certificate with the No Penalty CDs from the two internet banks.
| Interest Rate | Account Name | Credit Union/Bank |
|---|---|---|
| 1.85% APY | 30-Month No Penalty Certificate ($1k min) | AgFed Credit Union |
| 1.50% APY | 11-Month No Penalty CD ($25k min) | Ally Bank |
| 1.45% APY | 11-Month No Penalty CD ($1k min) | CIT Bank |
The above rates are accurate as of 9/13/2017.
Also how many no fee penalty CDs can be opened up ?
1. Their phone hold times can be relatively long.
2. The rep that answered really didn't know the answers to some of the important questions I had. She said a specialist would call me back in 24-48 hrs.
3. According to that rep, the dividends from the CD are:
a. Not able to be paid out of the CD account itself. Not sure if that's the same as Ken's note that interest is not compounded. In any case, if she's right (and she may not be, based on her knowledge level) the interest you earn sits in the account doing nothing until withdrawal.
b. Interest is paid out quarterly - asked her what was the case if the cd was closed prior to maturity - and in the middle of a quarter - did one give up the interest post the prior quarter, or was it proportionally paid? She didn't know, hence part of the reason for her deferral to a specialist.
Despite all that, I'm still interested. As Ken pointed out, a nice way to get a good yield while waiting for that '3%' cd to be issued, God willing.
Thanks for the info. Excuse my 'denseness', but I'm puzzled (nope, not being snarky - just puzzled) - if they're willing to give you interest up to the date of closure, even if it's in the midst of a quarter, what is it being avoided by leaving $1k in the account? Thanks in advance.
To my surprise, after I failed with the online app, somebody called me to tell me how to open by phone, I guess because my account number is in the application. I called back the next business day, and I was quickly transferred to the operations team to open the CDs. Eight minutes later, I had four new no-penalty CDs. (I opened four because that lets me have access to 1/4 of the money independently, rather than just one withdrawl opportunity.)