Virginia-basedPenFed Credit Union (PenFed) is celebrating the upcoming July 4th holiday with limited-time rates on two of its Money Market Certificates (MMC). Now through July 7, 2022, PenFed is offering excellent rates on the 5-year MMC (3.50% APY) and 2-year MMC (2.75% APY). Either MMC can be opened with a $1k minimum deposit, with no stated balance cap.
The 2-year and 5-year MMC are also available as IRA Certificates (Traditional, Roth, SEP, and CESA) earning APYs a uniform 5 bps lower. The Traditional, Roth, SEP require a $1k minimum opening deposit, while the CESA requires a lower $500 minimum deposit.
As stated in the Money Market Certificate Application, the Early Withdrawal Penalty (EWP) for terms greater than six months reads as follows:
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.
PenFed reserves the right to require a written notice of up to 60 days of the intention to withdraw funds pertaining to this certificate.
The EWP is definitely punitive, but at least the penalty will not eat into the principal. The worst-case scenario is the loss of all earned interest – nonetheless, the principal will remain intact. An early withdrawal from a 2-year MMC in the first year would result in a loss of all dividends earned during the first 12 months. Any early withdrawal following the 12 months would result in a loss of approximately 7 months of dividends.
A 5-year MCC will also forfeit all dividends earned in the first 18 months, with any early withdrawal following the 18 months resulting in loss of approximately 18 months of dividends.
According to the Disclosure section at the bottom of Money Market Certificates page,
For all certificates funded by ACH, funds cannot be withdrawn within the first 60 days of the account opening.
On the other hand, PenFed continues to allow penalty-free partial withdrawals of IRA MMCs for members over the age of 59 1/2. The following is an excerpt from the IRA MMC 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 withdrawal policy could possibly be one of the reasons why PenFed now keeps its IRA MMC rates five bps lower than its standard MMCs.
Funding and Distribution of Funds
Funding an MMC can be done by ACH, wire transfer, or check. PenFed does not participate in the CO-OP Shared Branch network.
Earned dividends can be added back into the MCC; transferred to a Regular Share, checking, or Money Market Savings account; or distributed by check to the address on file.
Maturing funds can be distributed through an ACH transfer (this is new), by check to the address on file, transferred to a PenFed Regular Share, checking, or Money Market Savings account, or rolled over into a new certificate.
Unlimited beneficiaries can be named, with assigned percentages available. Social Security number, full legal name, and physical address are required for each beneficiary.
As stated in the Money Market Certificate Disclosure,
At the time of establishing a certificate, you may elect to have your certificate automatically renew. You may change your renewal selection any time during the term of the certificate, but prior to the maturity date.
1. Automatically Renewable Certificates – If you selected this option, your certificate will automatically renew at maturity. There is no grace period during which penalty-free withdrawals may be received following the maturity of this certificate.
2. Non-Renewable Certificates – If you selected this option, your certificate will not renew automatically at maturity. If you do not renew the certificate, the funds in the certificate will be transferred to your Regular Share account, checking account, or MMSA, according to your selection, and will earn dividends based on the dividend rate then in effect for that account. If you elected to have your certificate funds paid to you, your certificate will no longer earn dividends after payment.
Headquartered in McLean, Virginia, PenFed Credit Union’s field of membership (FOM) had been open to almost every U.S. citizen or resident alien for many years, with a long list of ways to qualify. For those who did not qualify through residency, employment, or military relationship, joining one of two charitable organizations provided a pathway to PenFed membership.
Determining PenFed membership eligibility has become moot: the only requirement for joining is a $5 deposit in a Savings/Share account.
The Membership Application has been streamlined down to three simple steps.
Step 1 – Eligibility – Good news! PenFed membership is open to everyone, including you.
Step 2 – Provide Your Info – Enter your name, phone number, email and address to get started.
Step 3 – Open An Account – Open your savings account with just a $5 initial deposit and you’re a PenFed member!
Joining PenFed and/or opening a Money Market Certificate can done online or at any of the 39 full-service branches located in California, the District of Columbia (3), Florida (3), Georgia (2), Hawaii (3), Maryland, North Carolina, Nebraska (2), New Jersey, New York (4), Pennsylvania (2), Texas (10), Virginia (5), and Wisconsin.
You will need to maintain a $5 Savings/Share Account as part of your PenFed membership.
PenFed participates in the Allpoint ATM network providing members with access to 85,000 surcharge-free ATMs at large retailers such as Target, CVS, and 7-Eleven.
Credit Union Overview
PenFed Credit Union has an overall health grade of "A+" at DepositAccounts.com, with a Texas Ratio of 2.87% (excellent), based on March 31, 2022 data. In the past year, PenFed has increased its total non-brokered deposits by $4.34 billion, an excellent annual growth rate of 21.47%. Please refer to our financial overview of PenFed Credit Union (NCUA Charter # 227) for more details.
Established in 1935, PenFed Credit Union is currently the third largest credit union in the nation, with more than 2.7 million members and assets in excess of $35.3 billion. PenFed’s charitable organization, the PenFed Foundation for Military Heroes,
is a 501(c)3 nonprofit with a mission to empower military service members, veterans and their communities with the skills and resources to realize financial stability and opportunity. Since 2001, the PenFed Foundation has provided more than $38.5 million in financial support to more than 140,000 military families. Thanks to the generosity of the PenFed Credit Union which pays the majority of Foundation overhead, more than 95% of each donation goes directly to support our programs.
How the 2-Year and 5-Year Money Market Certificates Compare
When compared to similar length-of-term CDs tracked by DepositAccounts.com that are available nationwide and minimum deposit requirements of $10k or less, no banks or credit unions have higher rates than currently offered on the PenFed Credit Union 2-year and 5-year Money Market Certificates. The following tables compare the 2-year and 5-year MMCs to the two highest-rate CDs from other credit unions and the two highest-rate CDs from banks.
|APY||CD Term (Early Withdrawal Penalty)||Credit Union/Bank|
|2.75%||2-Year Money Market Certificate (EWP=30% of maturity dividends)||PenFed Credit Union|
|2.75%||2-Year Term CD (EWP=180 days)||Rising Bank|
|2.75%||22-Month CD Special (EWP=180 days)||Langley Federal Credit Union|
|2.53%||2-Year eCD (EWP=180 days)||First Central Savings Bank|
|2.50%||22-Month CD Special (EWP=120 days)||Consumers Credit Union (IL)|
|APY||CD Term (Early Withdrawal Penalty)||Credit Union/Bank|
|3.50%||5-Year Money Market Certificate (EWP=30% of maturity dividends)||PenFed Credit Union|
|3.25%||60-Month Popular Direct CD (EWP=730 days)||Popular Direct|
|3.09%||60-Month CD (EWP=360 days)||First Internet Bank|
|2.96%||60-Month Certificate (EWP=180 days)||Connexus Credit Union|
|2.80%||60-Month Certificate (EWP=less of 365 days or all earned dividends)||AgFed Credit Union|
The above information and rates are accurate as of 6/23/2022.
To look for the best CD rates, both nationwide and state specific, please refer to our CD Rates Table page.