PenFed Cuts CD Rates - Another Sign of Falling Rates


Deal Summary: Rate cuts on most Money Market Certificates/IRAs. 5-year (3.15% APY) has the most competitive rate.

Availability: Easy membership requirement

As feared, PenFed Credit Union (PenFed) started February by lowering the rates on most of its Money Market Certificates (MMC). Most of the MMC rates fell by 20 bps, except for the 36-month and 24-month which fell by 15 bps. There was no change in the 6-month rate. The new MMC APYs are shown below in bold and are effective as of 2/1/2019. The previous APYs are noted inside parentheses.

  • 84 mo - 3.15% (3.35%)
  • 60 mo - 3.15% (3.35%)
  • 48 mo - 2.95% (3.15%)
  • 36 mo - 2.90% (3.05%)
  • 24 mo - 2.80% (2.95%)
  • 18 mo - 2.75% (2.95%)
  • 15 mo - 2.70% (2.90%)
  • 12 mo - 2.60% (2.80%)
  • 6 mo - 2.40% (no change)

Wednesday’s Fed meeting made it apparent that the rate peak for this cycle may have already passed. Actually, CD rates had already been falling before the meeting. In fact, PenFed made the unusual move to cut its MMC rates in the middle of the month. On January 18th, PenFed reduced the rate of its 5-year and 7-year MMCs by 15 bps.

The new 3.15% APY is disappointing after seeing 3.50% APY in December and early January. Many had been hoping for 4% in December which would have been a nice replacement for the 3.04% APY 5-year MMCs that were offered in late 2013 and early 2014. If you waited too long, you’ll have to settle for only a slight upgrade to the 3.04% if you want to stay with PenFed.

Any MMC can be opened with a minimum $1k deposit, and there are no stated balance caps. All of the above terms, with the exception of the 6-, 15- and 18-months, are available as IRAs (Traditional, Roth, and CESA) but with APYs 10 bps lower.

PenFed’s Early Withdrawal Penalty (EWP) changed in 2016 and any MMCs that are renewed from now on are subject to the following:

Certificates Having a Term Greater Than Six Months.

    a) If redeemed within the first year, all dividends will be forfeited.

    b) If redeemed thereafter, but prior to the maturity date, the early withdrawal penalty will equal 30% of what would have been earned if the certificate had been held to maturity, not to exceed total dividends earned.

As you can see, the EWP is harsh. For the 12-month term, no matter when a withdrawal occurs, it is loss of all earned interest.

On the other hand, PenFed continues to allow penalty-free partial withdrawals of IRA CDs for members over the age of 59 1/2. The following is an excerpt from the IRA CD disclosure:

Partial withdrawals for members over the age 59 1/2 (including Required Minimum Distributions) and qualified distributions regardless of age (including Disability) may be processed from IRA certificates without incurring an early redemption penalty.

This may be one reason PenFed now keeps its IRA CD rates 10 bps lower than its standard CDs.

Thanks to DA reader, HighYield, for his Forum post about PenFed’s February rate cuts.


Headquartered just outside the Beltway in McLean, Virginia, PenFed Credit Union offers membership to almost every U.S. resident. PenFed’s online application lists the various ways in which individuals can qualify for membership.

If you meet any of the following requirements, you are eligible to join PenFed:

1. I am active/retired United States Military & Uniformed Services.

2. I am an employee of a qualifying organization.

3. I belong to the following association or organization.

4. I am an employee of the United State government.

5. I am a relative or housemate of someone who is eligible.

6. I live or work at an eligible location.

7. Other

Selecting Option #7, "Other," provides information about joining PenFed through membership in either Voices for America’s Troops ($17, one-time only dues) or the National Military Family Association ($17, one-time only dues). Joining either of these associations and PenFed can be done simultaneously using PenFed’s online application.

Need another way to join? No problem!
Members of the National Military Family Association and Voices for America's
Troops are among those eligible for PenFed membership. We've made it easy for
you to join one of these associations, which makes you eligible to join PenFed.

Joining PenFed and/or opening a Money Market Certificate can also be done in person at any of the 47 full-service branches located in California, the District of Columbia (5), Florida, Georgia (6), Hawaii (3), Kentucky, Maryland (3), North Carolina, Nebraska, New Mexico (2), New York (1), Pennsylvania (4), Tennessee, Texas (8), and Virginia (9).

Credit Union Overview

PenFed Credit Union has an overall health grade of "A" at, with a Texas Ratio of 5.35% (excellent), based on September 30, 2018 data. In the past year, PenFed has increased its total deposits by $703 million, an excellent annual growth rate of 3.98%. Please refer to our financial overview of PenFed Credit Union (NCUA Charter # 227) for more details.

Established in 1935, PenFed Credit Union is the third largest credit union in the nation, with more than 1,685,000 members and assets in excess of $24 billion.

How the Money Market Certificate Compares

When compared to 193 similar length-of-term CDs tracked by that are nationally available and require a similar minimum deposit, PenFed Credit Union's 5-year Money Market Certificate APY currently ranks far below the top.

The above rates are accurate as of 2/1/2019.

To searching for the best CD rates, both nationwide and in your state? Please refer to CD Rates Table page.

Related Pages: 1-year CD rates, 5-year CD rates, nationwide deals

  |     |   Comment #1
PenFed EWP is a killer!
  |     |   Comment #3
Their EWP is not a killer for me. When it comes to CDs, I set and forget until maturity. I don't trade CDs like stocks and bonds. Though, it is disappointing but not unexpected, due to current events, to see their interest rates trending down. Sign of the times.
Get Real
  |     |   Comment #2
I wonder how much money was pulled out of Penfed the past couple of months?
  |     |   Comment #4
  |     |   Comment #8
pulled all ~$400K
  |     |   Comment #20
Where did you guys transfer to. Thanks.
  |     |   Comment #21
Connexus CU @ 3.63%...IT was the best option a few days ago
  |     |   Comment #23
3.33% CD in local CU (180 EWP)
  |     |   Comment #37
What I wonder is how much money is compounding away in those 10 year, 5% CD’s and what, if any, impact they have on current rates. Also the acquisition of Tobyhanna, and other CU’s?
  |     |   Comment #44
PenFed already closed at least one of the former Tobyhanna CU offices.
  |     |   Comment #82
I still have $340,000 in those 10 year cds, with 2 years left to go. I was so very lucky to have been able to invest in those 5% ten year cds! Thank you, PenFed
  |     |   Comment #5
I just had $150K 5 year CD mature with them and rate was 3.04% That rate was much higher than anything else available around when I locked it in as rates were around 2.50%
They do raise and lower their rates regardless of economy depending how much money they do need...
Get Real
  |     |   Comment #6
I closed a 30 k CD. I still have my 5% 10 year CD I opened with them in 2010 or 11. They are irrelevant unless you are looking at IRA withdrawals
  |     |   Comment #36
@GetReal...good job on that 5% deal which is probably the best over the past decade. That said PenFed got burned on that one and is likely more sensitive to rate policy these days. Once bitten...twice shy comes to mind.
Get Real
  |     |   Comment #40
Robb I totally agree. Their business model of offering much higher rates than any other institutions probably wasn't good for their bottom line but was great for savers while it lasted
  |     |   Comment #84
@Get Real

Why do you refer to PenFed as "they" and "their"? It's we the members that own it, and whose needs it exists to serve, not the "bottom line". The previous (long serving) CEO James Flynn understood that, and when the CU thrived he passed along the bounty in the form of industry leading deposit rates, unconcerned that they often substantially exceeded what other FI's were offering. Are you aware CU's aren't profit-oriented entities? Of course they need to maintain financial viability, - cover expenses, fund capital needs, build reserves, - but their mission is not maximal returns for outside investors, but maximal returns for its owners, us, - and the way you accomplish that after operational efficiencies, is through deposit and loan rates, as high or low as the CU's performance allows. The new CEO has a different mindset from Flynn (it was Flynn who was behind both the 10 year 5% CD of eight or so years ago, and the 3% 5&7 year offer in 2013), a "corporate" one rather than member-oriented. PenFed's not the same entity it once was, and a return to the former CEO's philosophy very unlikely.
  |     |   Comment #59
Get Real (re comment #6): Those IRA CD partial withdrawals (for folks over 59 1/2) are still (I suspect) the flypaper. As I've noted in other threads, folks taking RMDs often face a juggling act. For example, if you have an IRA CD maturing in 20019 in the amount of $40,000, but your RMD is $60,000, you need to find an exit ramp for the additional $20,000. Assuming you don't want to tap equities or bond funds, having a PenFed IRA CD provides an elegant solution. Using PenFed Form 735, you request a "normal distribution" from one of your PenFed IRA CDs in the amount of $20,000. The balance of the IRA CD keeps clicking along at the stated rate of interest.
Get Real
  |     |   Comment #64
Bozo They have the fly paper for IRAs and you pay a small price as the IRA rates are .10% lower than non IRA rates.

They can always change their IRA withdrawal policys.

I have 2 IRAs with Vanguard. Most of my retirement savings in 401ks that we contribute too and ate matched. One of my wife's employers matched $1.25 for each dollar she put alway with a percent limitation but that was nice.
  |     |   Comment #7
Well I was hoping for better Pen an Broken record sorry meant Brokered EWP how about OMG everyone KNOWS the penalty. Like HoldCD's it isnt 4 me either I set an go. Just had another come on Wednesday I just didn't want to roll it an couldn't get there so had set it to go into my local Bank7 now with Connexus dropping theirs I think I am either hitting Gauranty or do another shorty
  |     |   Comment #12
it took pen fed and others 8 mo to raise rates .50 and they dropped the .50 in two weeks THE FED IS RIGGING THE MKT FOR STOCKHOLDERS
  |     |   Comment #13
5 yr at 310 this is a joke
  |     |   Comment #16
A few years ago, savers were begging for that offer, which was nowhere to be found.
  |     |   Comment #27
i still have the Tobyhanna/valor 7year cd 3 percent with them which comes due early in 2021. I doubt they sustained big losses taking over Tobyhanna
  |     |   Comment #15
In my view, PenFed is not at all a bellwether where interest rates are concerned. Instead PenFed today, figuratively speaking, is out on its own little interest rate island, an island fewer people want to visit than was the case back in PenFed's halcyon years.
  |     |   Comment #18
Smart name and smart post
Go Navy
  |     |   Comment #19
Will others take PenFed's cue? Who will be the next big CU or bank to lower rates across the board.
  |     |   Comment #22
If renewed roday at these rates, my 1-year certificate would make $100 less at maturity. Not enough for me to jump ship.
  |     |   Comment #25
I understand. But please do not forget, or discount, the power of compound interest. It's not merely the $100 you are losing. You are losing, in addition, the interest that $100 will earn for you going forward in time. OK, if it were just this single instance, that is still not a boatload of money. But your approach writ large, and practiced over many years, is a really significant money loser. Think long term.
  |     |   Comment #28
Thanks QED. But I don't let my certificates compound. I take the monthly interest and go have some fun with it. I don't have much time left so I enjoy the money.
  |     |   Comment #32
Understood. I take your point and I agree with your approach. I did not consider that situation. Wrongly had you figured for a young person.
  |     |   Comment #34
Thank you. Keep up the good work and advice.
  |     |   Comment #38
how old is considered young? my frame of reference has been moving up, 60 is the new 50
  |     |   Comment #42
Truth is, I have never let my CDs compound. When I was "young" it was needed to supplement income. And now in the Golden Years I use it for traveling and fun. I just don't hoard money. We can't take it with us.
  |     |   Comment #45
Good for you. Enjoying it in our "Golden Years". That's the way I figure it too. Those years will slip by sooner than you think.

We earned it, why not spend it. I have no desire to die rich nor leave a nursing home get it all.
  |     |   Comment #47
Truth is......You should have. You lost out on a lot of money. And it's very easy usually to adjust this at most banks.This has nothing to do with "hoarding money"'s about being smart with it. Big mistake.
  |     |   Comment #48
Do not agree. Money is the LEAST of my concerns. And I did not "lose out" on a lot of money. I spend the interest as I wish and enjoy it.
  |     |   Comment #50
Geez. There sure are a lot of whack-jobs on this website. Having lots of money must cause some of these guys to go nuts. Their entire life revolves around CD's. LOL
  |     |   Comment #53

Just what do you think this site"" is all about?

Naturally it's rightfully focused on CDs.
  |     |   Comment #26
I come from a military family. I will always keep some certificates in PenFed. I like what they do for the troops, and I contribute to the foundation charity they have, etc. This small rate cut is not a deal breaker for me. And as you all know, I don't chase rates.
  |     |   Comment #31
A penfed rep actually called me yesterday. She said this is a courtesy call ,you have a maturing cd directed to go to share account would you like to renew it ? Said no ,do as I directed so I can transfer it out out of penfed .she was very cheerful about it though , will put it to northern direct for now.
  |     |   Comment #39
Boo, PenFed. Cut your TV ad budget if you don't want the deposits!
Get Real
  |     |   Comment #43
Ken just posted NASA just raised rates. They have a 15 month @ 3.20% APY , 25-month (3.25% APY), 49-month (3.35% APY).
  |     |   Comment #78
Oklahoma State Bank has a 23 month 3.23% cd.....This bank is very friendly...It was easy & quick when we walked in to open several cds.... They set up all the paperwork for you on the spot....We went to the Norman location & no need to open a checking or savings account, they will ACH your monthly interest to any account you want or send a monthly check.
  |     |   Comment #79
Can You add to the certificate?
  |     |   Comment #46
I closed all accounts with them......Rates are no good and had a couple of rude customer service people.......Bye!
Bye Trax!
  |     |   Comment #49
Bye Trax!
I've had excellent customer service at NASA. No problems whatsoever.
  |     |   Comment #54
That's odd. I have been a long time member at PenFed and have never had a problem with any of their CSRs.
  |     |   Comment #57
Me too. No Problemo.
  |     |   Comment #51
Mountain America Credit Union is still offering 3.51 5 year term deposits and term deposit plus add-ons. I don't know why they have disappeared from the rate listings on this site.
  |     |   Comment #52
I just got back from opening another CD with Guaranty @3.75/60 branch visit req.and yeah I don't understand that either Mountain is a great place their CSR's are among the best I have ever dealt with. I opened that 5yr earlier today but did the plus+ I just took some interest from another CD there to satisfy the monthly dep. so I could stuff some there if rates do become depressed and I have nowhere to stick the ones I have coming due later this year in.
  |     |   Comment #55
closed all 3 PenFed CD's and went with 12 month CD's at Banesco paying out 2.85% rate every 30 days
whack job
  |     |   Comment #56
The day that Discover Bank has a higher 12 month rate than Penfed, means all the planets are out of whack.
  |     |   Comment #58
I see no reason to "pile on" penfed. Just go elsewhere.

All FIs must do what is in their best interest and I have a feeling penfed has regretted some of their past CDs with high rates so they don't want to make the same mistake.
Go Navy
  |     |   Comment #60
They didn't touch my 6 month cd that pays 2.40%. Full speed ahead!!!
  |     |   Comment #61
I just had some IRA CDs mature, and did not renew. I have a number of 10 year 5% CDs maturing in 2021, then I am pretty much done with PenFed. They use to be the rate leader, but now they are the rate laggard.
  |     |   Comment #62
the 5 yr rate is a disgrace a .35 drop in two weeks is a sign of panic LOOKS LIKE THEY ARE IN TROUBLE
  |     |   Comment #63
Or they are just extremely cautious this time around after the really high rates they offered a decade ago and got burned. The future and direction of interest rates can turn on a dime, as most of us who have been around for a while know from past experience.
  |     |   Comment #65
PenFed's 5-yr rate is determined by their need for money and economic forces. They're just following the crowd as long-term rates decline.
  |     |   Comment #66
See prior posts...the NCUA came down on them
  |     |   Comment #67
You're going to have to be more specific or there's no point in posting.
  |     |   Comment #68
Do the requisite due diligence starting with the WSJ in 2017/8
Do the Due
  |     |   Comment #69
Due Diligence is Key!
  |     |   Comment #70
#66 Brokered. I agree, so I did a quick search.
The WSJ article is behind a paywall, but articles about an August 1st article titled “No Speed Limit” reveal PenFed CEO’s goal to increase assets to $75 billion by 2025. As part of the plan PenFed acquired 13 smaller CU’s in a 20-month span between 2015-2017 before receiving a regulatory warning about new deals.

Also, PF acquired troubled taxi medallion lender Progressive CU in an emergency merger on January 1st this year. At the end of 2018 Progressive had $325.6 million in assets and $270.5 million in commercial loans not secured by real estate. The merger permits PF to serve anyone in the country because Progressive had an open charter granted by the state of New York.

Pen Fed is opening a Financial Center in San Antonio.
  |     |   Comment #71
Opps #67, not #66.
  |     |   Comment #73
As a PenFed member I'm fully aware of these developments. As you correctly reported PenFed's expansion triggered "warnings" from regulators. Why? Because credit unions are supposed to be non-profit and limited in nature.

Every person on this board clamoring for "easier" credit union enrollment requirements is simply encouraging a basic violation of credit union principles. PenFed is simply taking advantage of the current lax climate and on their way to becoming the perfect example why credit unions should be regulated back to their original mandate or converted to for profit banks.

I expect this post to be removed...:)
  |     |   Comment #74
How is that different than Banks merging Banks . And the profits go to investors . CU loan at lower rates and pay higher interest to members. That is why we are here. And who hasn't been glad that ones CU merged with another, saving their butts
  |     |   Comment #75
It's not and that's exactly why the head honchos warned. Banks don't like CU's and when CU's start acting like banks it's just a matter of time before they're forced to become banks. The head honchos don't want that and that means they don't want the publicity.

Money is money so I don't care one way or another. A low income friend is retired and earning a fairly good rate on CD's from the local CU so I'm a supporter of CU's.
  |     |   Comment #76
I believe I clarified post #66 from Nothing. Apologies if I misunderstood your post #67.
  |     |   Comment #77
I had a feeling penfed was on track to lower their cds. I just opened cds that were 5yr s at 3.35% and was just going to open more however I will not now... Very slow sending your cds out as it has been about about 2wks since they were opened... They are very slow at a lot of things lately.. I did open a 5 yr 3.50 ONE Also 1099s for me are suppose to come in the mail however they push me to online even after I clicked it to be sent... Don't know if they charge... what else
  |     |   Comment #83
As I've said here before, these CU's and banks are following the market lower.

Penfed cutting is the least surprising thing that could have happened,
Haro;ld McFeely
  |     |   Comment #85
It is almost impossible to get CD rates. YOu keep switching to Money Market rates when you click CD rates.
ok here
  |     |   Comment #86
no problem here with that happening
maybe you have a fat mouse hitting MM
PenFed CD Rate Increases Are Modest
Deal Summary: Rate increases on most Money Market Certificates/IRAs, with the 5-year (3.50% APY) having the most competitive rate.

Availability: Easy membership requirement

As anticipated and hoped for by many, PenFed Credit Union (PenFed) started December by raising the rates on all its Money Market Certificate (MMC), with the longer-term MMCs gaining the most ground. Unfortunately, the new rates don’t match our collective expectations, with increases of between 9 and 25 bps. Simply put, the new rates aren’t that great. The new MMC APYs are shown below in bold...

Continue Reading
PenFed CDs Make Small Gains
Deal Summary: Rate increases on most Money Market Certificates/IRAs, with the 12-month (2.71% APY) having the most competitive rate.

Availability: Easy membership requirement

For the second month in a row, PenFed Credit Union (PenFed) has started the month by raising its Money Market Certificate (MMC) rates. Like October’s rates, the new rates aren’t that great. Of the nine MMCs in the product line, only the 12-month (2.71% APY) has a rate worth highlighting.

I’m hoping that we’ll see some very competitive rates at PenFed in December. This...

Continue Reading
New CD Rates Offered by PenFed Credit Union
Deal Summary: Rate increases on all Money Market Certificates/IRAs. Most noteworthy are the 5-year (3.30% APY) and 12-month (2.60% APY).

Availability: Easy membership requirement

Good news – PenFed Credit Union (PenFed) has started the month by raising the rates on most of its Money Market Certificates. Unfortunately, the new rates aren’t that exceptional. (FYI – a Money Market Certificate (MMC) is essentially a CDs.) Of the nine MMCs in the product line, the 5-year (3.30% APY) and 12-month (2.60% APY) are the most competitive.

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PenFed Credit Union Begins June With New CD Rates
Deal Summary: Rate increases on all Money Market Certificates/IRAs. Most noteworthy are the 12-month (2.25% APY) and 5-year (3.00% APY).

Availability: Easy membership requirement

PenFed Credit Union (PenFed) announced new rates on its Money Market Certificate (MMC) but they are not exceptional. (Don’t be confused by the “Money Market Certificate” moniker – they’re essentially CDs.) While the 5- and 7-year MMCs have broken the 3.00% APY ceiling, none of the new APYs are rate leaders, as internet banks (and a few credit unions) continue to be the front-runners...

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First Of The Month CD Rate Increases At PenFed
Deal Summary: Rate increases on all Money Market Certificates/IRAs. Most noteworthy are the 12-month (2.07% APY), 18-month (2.22% APY), and 5-year (2.68% APY).

Availability: Easy membership requirement

It’s the first of the month, which means PenFed Credit Union (PenFed) will probably have raised its Money Market Certificate (MMC) rates. While several of the new APYs are competitive, none of them are rate leaders, as internet banks continue to be the front-runners in the CD rates race. Ever the optimist, I look forward to hot MMC deals at PenFed –...

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