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 – hopefully in the near future.
The minimum opening deposit is $1k, with no stated balance cap. While PenFed calls these Money Market Certificates, they are essentially CDs. 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 5 bps lower.
The MMC yields have increased from between 20 to 35 bps. While PenFed’s long-term rates continue to rise, 5- and 7-year rates are still 32 and 27 bps away, respectively, from 3%. I’m afraid we’ll have to keep waiting for the 3% CDs that we saw at PenFed in 2013 and 2014.
The following table compares PenFed’s MMC February and March APYs. As you can see, the rates seem to have increased proportionally.
In 2016, PenFed’s Early Withdrawal Penalty (EWP) changed and now reads as follows:
1) Six-month Money Market Certificates.
a) If redeemed within 90 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 90 days will be forfeited.
2) 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 a 5-year term, 30% of total dividends is 18 months’ interest.
On the positive side, 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 5 bps lower than its standard CDs.
Thanks to DA reader, marcal, for his Forum post about these rate increases.
Headquartered in Alexandria, Virginia, Pentagon Federal Credit Union offers membership to virtually all U.S. residents. 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.
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 branches located in California, the District of Columbia (6), Florida, Georgia (6), Hawaii (3), Kentucky, Maryland (4), North Carolina, Nebraska, New Mexico (2), New York (2), Pennsylvania (4), Tennessee, Texas (8), Virginia (9), and Puerto Rico.
Credit Union Overview
PenFed Credit Union has an overall health grade of "A" at DepositAccounts.com, with a Texas ratio of 4.11% (excellent), based on September 30, 2017 data. In the past year, PenFed has increased its total deposits by $1.37 billion, an excellent annual growth rate of 8.44%. 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 1,626,000 members and assets in excess of $22 billion.
How the Money Market Certificates Compare
When compared to the 212 similar length-of-term CDs tracked by DepositAccounts.com that are nationally available and require a minimum deposit of $10k or less, PenFed Credit Union's 12-month Money Market Certificate APY currently ranks second.
When compared to the 165 similar length-of-term CDs tracked by DepositAccounts.com that are nationally available and require a minimum deposit of $10k or less, PenFed Credit Union's 18-month Money Market Certificate APY currently ranks third.
When compared to the 191 similar length-of-term CDs tracked by DepositAccounts.com that are nationally available and require a minimum deposit of $10k or less, PenFed Credit Union's 5-year Money Market Certificate APY currently ranks third.
The above rates are accurate as of 3/1/2018.
To search for the best CD rates, both nationwide and state specific, please refer to CD Rates Table page.