PenFed Credit Union Begins June With New CD Rates

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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 in the CD rates race.

APYMINMAXINSTITUTIONPRODUCTDETAILS
3.10%$1k-PenFed Credit Union7 Year Money Market Certificate
3.00%$1k-PenFed Credit Union5 Year Money Market Certificate
2.65%$1k-PenFed Credit Union4 Year Money Market Certificate
2.60%$1k-PenFed Credit Union3 Year Money Market Certificate
2.50%$1k-PenFed Credit Union2 Year Money Market Certificate
2.40%$1k-PenFed Credit Union15 Month Money Market Certificate
2.40%$1k-PenFed Credit Union18 Month Money Market Certificate
2.35%$1k-PenFed Credit Union12 Month Money Market Certificate
1.85%$1k-PenFed Credit Union6 Month Money Market Certificate
Rates as of July 22, 2018.

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.

The following table compares PenFed’s MMC APYs from February 2018 through today. For the most part, the rates seem to have increased proportionally.

Rate Comparison Chart

PenFed’s Early Withdrawal Penalty (EWP) changed in 2016 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 10 bps lower than its standard CDs.

Availability

Headquartered in Tysons Corner, Virginia, PenFed 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.

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 49 full-service branches located in California, the District of Columbia (5), Florida, Georgia (6), Hawaii (3), Kentucky, Maryland (4), North Carolina, Nebraska, New Mexico (2), New York (2), Pennsylvania (4), Tennessee, Texas (8), and Virginia (9).

Credit Union Overview

PenFed Credit Union has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 4.81% (excellent), based on December 31, 2017 data. In the past year, PenFed has increased its total deposits by $1.15 billion, an excellent annual growth rate of 6.92%. 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 1,650,000 members and assets in excess of $22.8 billion.

How the Money Market Certificates Compare

When compared to the 217 similar length-of-term CDs tracked by DepositAccounts.com that are nationally available and require a similar minimum deposit, PenFed Credit Union's 12-month Money Market Certificate APY currently ranks seventh.

When compared to the 190 similar length-of-term CDs tracked by DepositAccounts.com that are nationally available and require a similar minimum deposit, PenFed Credit Union's 5-year Money Market Certificate APY currently ranks sixth.

The above rates are accurate as of 6/1/2018.

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

Comments
Robb
Robb   |     |   Comment #1
That's a brutal EWP for longer term CD's. Not sure why anyone would do those versus the typical 6-12 month EWP from the competition especially in a rising rate environment.
hero
hero   |     |   Comment #2
Disappointing rates with a terrible EWP. For the past couple years I've been going elsewhere, see no reason to go back to them.
Deal Hunter
Deal Hunter   |     |   Comment #3
Where can one find these better deals??
RJM
RJM   |     |   Comment #5
Brokered CDs pay 2.30% and 3.2% as of a week ago.

You can get 2.05% at Northpoint with a 1 year guarantee.

Maybe I would not hate them so much if I lived near a branch. But I don't.
BrokeredCDBum
BrokeredCDBum   |     |   Comment #51
Brokered CD pays 3.2% simple interest, which is equivalent to 3.01% APY compound interest. So the penfed deal is about the same as a brokered CD, but WITH a known cap on EWP.
RJM
RJM   |     |   Comment #4
The 12 month is at least close to market. But, for me, I want OUT of Penfed. I did not pay any attention to HOW HARD it was to get my money out and because of that, I will not reward them with more business after my current CDs mature. Unless they just have a killer rate.

There is no rational reason why I can't ACH my money out in large increments. And whats funny is not long ago, they had an annual meeting of members. I wasn't going of course but they have a lot of GALL to charge you to attend,
CC in CA
CC in CA   |     |   Comment #6
Can you ACH the money out as a PULL initiated at the other institution? That's how I've done it to move money out of PenFed (but then again, I think I've only ACH'd less than $15 at a time).
CC in CA
CC in CA   |     |   Comment #7
I meant to say $15K at a time. Oops. Just noticed that.
RJM
RJM   |     |   Comment #12
Very recently, their ACH out limit was very low. Maybe $5000 per day. At least that is what they told me. I wired it all. For a $20.

I think that was my first wire and hopefully my last. I think I have a smaller one maturing next month and I may just try the $5000 a day for 5-6 days. I am going to try to write management though. Because its just not right.

But, they are too busy charging $10 a head for members to attend their annual meeting. I hope that included a very nice meal or something. Otherwise, who would go?
Dinner Anyone?
Dinner Anyone?   |     |   Comment #13
How were you charged $10 to go to their annual meeting? Neither my or my wife's account are showing such a charge. If they did, I'd really be ticked! With their high EWP I think I'll find another place to park my money.
RJM
RJM   |     |   Comment #18
I was not charged. Those that attended the annual meeting were.

https://www.penfed.org/content/dam/penfed/general/pdf/member-notices/AnnualMeetingInvite_2018
Moving Money
Moving Money   |     |   Comment #44
I am in the same boat as you are concerning moving my money OUT of PenFed. I just called PenFed and they did verify that the maximum amount of money that you can "push" out is 5k. The CSR suggested that I use my outside bank to "pull" my money out. I ask him what the maximum on that is and he answered "as long as you have enough money in your account that you're requesting, PenFed will honor it." So rather than make several 5k "pushes" of money, just do one large pull. Let's just hope he was correct with the information he gave to me.
RJM
RJM   |     |   Comment #62
I believe I initially thought that too. But later, a different rep said the $5000 was no matter if it was a push or a pull.

Please let me know as I have another maturing on 7/30 at penfed. Sorry I did not see your message until now.
Bozo
Bozo   |     |   Comment #8
The only saving grace is with PenFed IRA CDs. No EWP on partial withdrawals if one is over 59 1/2. PenFed is one of a few offering this perquisite (NWFCU, StateFarmBank, and Patelco also come to mind).
Bozo
Bozo   |     |   Comment #9
Further to my comment #8, a funny (but true) story. I opened my first PenFed account in 2010 at the Veterans Building in Kansas City. I walked in the door, and the person at the desk was literally asleep. I was the first (and possibly only) customer that day. That office is now closed.
Nothing
Nothing   |     |   Comment #10
Saving grace! Why would any firm have its clients incur a penalty b/c of a mandatory withdrawal requirement? No one!
Straight Talker
Straight Talker   |     |   Comment #11
But with PenFed and a few others the penalty free withdrawal isn't limited to the "mandatory amount" (required minimum distribution). Get your facts straight.
anonymous
anonymous   |     |   Comment #20
The RMD withdrawal can be made from any IRA account, it does not have to be the specific IRA CD. I suppose if someone had all their IRA funds in CDs, this problem could arise.
Bozo
Bozo   |     |   Comment #26
Anonymous (re comment #20, the perquisite is relevant mostly to folks over the age of 59 1/2 but not in the RMD age group.
Bozo
Bozo   |     |   Comment #27
Further to my comment # 26: Joe has $200,000 in PenFed IRA CDs. Joe wants to withdraw $100,000 to meet current account requirements. Joe is 70 years old. Joe can withdraw that $100,000 penalty-free. He will need to pay the tax on the withdrawal, but not the penalty.
anonymous
anonymous   |     |   Comment #31
Following the logic of having to meet RMDs, does Penfed allow withdrawals without EWP for people under age 59 1/2 that have an inherited IRA? Inherited IRAs have an RMD requirement at any age.
111
111   |     |   Comment #49
The PenFed perquisite involving "no EWP on partial withdrawals if one is over 59 1/2" - yes it can be beneficial, but in the past few years PenFed has -

1) Gone from being a CD rate leader, where one could usually expect good rates in January, to being an also-ran,

2) Significantly increased punitive EWPs, and

3) This doesn't involve CDs, but a few years ago PenFed made a move to cut the dollar value of a "point", for all their credit cards that accumulate point rewards. 1 point used to equal 1 cent, now it is less (perhaps 80% of that?). This annoyed many, many customers. I now regularly use only one PenFed card (that one was grandfathered in, and you can't get it anymore). It gives 5% cash-back, not points, for gasoline only.

So in summary - can PenFed really be trusted to continue to honor the "no EWP on partial withdrawals if one is over 59 1/2" clause? For those concerned that EWP terms written in disclosure statements can be retroactively changed - can't this clause as well?
Rickny
Rickny   |     |   Comment #52
I also have grandfatheted 5% cash back on gas credit card. The 5% is credited with each statement. I use it only for gasoline purchases.
111
111   |     |   Comment #53
Yep. That's the only thing it's really good for, but it's VERY good for that. Doesn't change quarter-to-quarter, doesn't matter WHICH gas station you buy at, etc.
RJM
RJM   |     |   Comment #56
I went with the cash bonus for switching to their newer, worser points back on gas because I determined the bonus dwarfed the cashback. Plus, I get gas gift cards at bigger discounts than 5%.
111
111   |     |   Comment #58
I understand that you get more than 5% with these gas giftcards. But - I bet you can't use them at ANY gas station you want to - right?
RJM
RJM   |     |   Comment #63
Yes and in hindsight, I bought too many. And to make matters worse, many of the BPs in my area rebranded. There are still a few here and there but nowhere near as many as there used to be.

Sorry for the late response. I missed one above too.
Rickny
Rickny   |     |   Comment #14
No reason to keep a non IRA CD with them. I have a large CD coming due later in the year that looks like it will be going elsewhere. I still have a 10 year CD that pays 5% that goes to 2021.
Robb
Robb   |     |   Comment #15
@Rickny Wow 5% over 10 years during the greatest rate drought in most of our lifetimes. Nice job snagging that one! Talk about outperformance! Hope you put a lot away on that CD.
Rickny
Rickny   |     |   Comment #16
Some say it was a mistake that Penfed made. I put a nice sum in. It's the only time closed a CD early to fund some of it.
xxx
xxx   |     |   Comment #24
dont think it was a mistake.
only the way some got it
BJS
BJS   |     |   Comment #17
Brokered 5 yr is higher......3.30% at last check
gregk
gregk   |     |   Comment #19
Impossible to believe we'll see any 5% CD in the current business cycle, and even another 4% CD is seeming doubtful unless the economic expansion and Fed tightening go on for considerably longer than I expect. The practical dilemma then becomes how to recognize a peak long term rate when it happens, and what shorter maturities one can safely commit to without risking having funds tied up when we reach that point. Personally I'm wary of anything more than 18 months now, but a more momentous decision will come late in the year when mega-dollars of 3.5% & 3% CD's come due at Northwest, PenFed, and a local CU. Unlikely rates will be peaking by then, but to stay liquid or short for a time might mean a sacrifice of considerable yield and/or certainty from what I've become used to the last 5-7 years. The "fine-tuning" is off by about a year or so, I would judge, where I (prospectively) might have been able to slide right into similar term renewals at a significantly higher (even maximized) rate than the original investments.
Bogie
Bogie   |     |   Comment #21
Thankfully, with a well laddered CD investment style, which has been in place for years, I don't have to concern myself with all the possible scenarios of which way CD rates will go in the future.
#23 - This comment has been removed for violating our comment policy.
#25 - This comment has been removed for violating our comment policy.
Bozo
Bozo   |     |   Comment #28
gregk (re comment #25), I doubt that one can generalize about folks with ladders. Ken Tumin has advocated a laddering strategy for years. He recently sold his website to Learning Tree for, shall we say, quite a few millions. I doubt he was lacking in financial intelligence.

I'm not a huge fan of 5-year CD ladders these days, but that doesn't mean that folks who are fans of same are dummies.
Amos
Amos   |     |   Comment #29
Well said, Bozo.
gregk
gregk   |     |   Comment #33
BTW Bozo, was it "Learning Tree" or "Lending Tree" that made Ken a multi-millionaire?
anonymous
anonymous   |     |   Comment #30
gregk, there's a lot of benefits to laddering. Money will always be invested at long durations with laddering, which over time will result in the highest rates. Also, trying to time the market is not necessary with laddering.

That said, it's not for everyone. The analogy from the stock market is probably that some people like active trading and some like an investment plan with a fixed asset allocation and periodic rebalancing. It doesn't mean the people following a rigid investment plan are financially less literate. In fact, market timers on average have lower returns.
gregk
gregk   |     |   Comment #32
Yes, all true. My critique (now removed, - which took longer than I expected) was no more than a bit of light-hearted hyperbole. Apologies to all ladderers who took offense. It's an understandable strategy for those of a certain temperament (not mine).
Fixed Income 101
Fixed Income 101   |     |   Comment #34
Ask Bozo if CDs have a duration.
Bozo
Bozo   |     |   Comment #36
Fixed (re comment # 34) this is a hotly debated topic. If "duration" is defined solely as sensitivity to interest rates, then the answer is "no", Purists will factor in EWPs (I do not). To factor in EWPs is to complicate an already frustratingly complicated calculation. Are EWPs sensitive to interest rates? Some might argue "no", others might argue "yes."
#37 - This comment has been removed for violating our comment policy.
Bozo
Bozo   |     |   Comment #40
I'll turn it around. Do you feel EWPs affect duration?
Fixed Income 101
Fixed Income 101   |     |   Comment #42
Bozo, duration is a mathematical formula, not a political argument.

What a waste of time.
Bozo
Bozo   |     |   Comment #38
Further to my comment # 36, EWPs can be impacted by the whim of a Board of Directors, which may have everything to do with a CD over-subscription and zero to do with trending interest rates.
Fixed Income 101
Fixed Income 101   |     |   Comment #39
bozo, the ewp has nothing to do with calculating a cd's duration.
Bozo
Bozo   |     |   Comment #41
Fixed, then we agree. A CDs duration is, by definition "zero". Neither the EWP nor changes in interest rates have any impact. If you hold the CD to maturity, then "what you see is what you get". Why is this such a hard concept for you to grasp?
Fixed Income 101
Fixed Income 101   |     |   Comment #43
Bozo, nobody but you claims CDs have zero duration. It doesn't make any sort of sense.

EWP is a put option, it has nothing to do with duration.
anonymous
anonymous   |     |   Comment #45
Bozo, Fixed Income 101,

Let's put the definition of "duration" aside for a moment, I think we can probably agree that CDs (just like marketable bonds) have interest rate risk. If interest rates rise after a CD rate is locked in, then this is a missed opportunity to earn a higher rate. And the longer the CD term, the higher the missed opportunity. In a marketable bond (or a brokered CD), this would be reflected in the lower value.

Actually in my comment #30, I misused the term 'duration.' Duration (if any) is not an advantage of long-term CDs. Higher interest rates due to longer maturity is the advantage. The reason that the interest rate will be higher is due to the term structure of interest rates (i.e., longer maturities take on more interest rate risk, therefore are compensated with a higher term premium).
#46 - This comment has been removed for violating our comment policy.
Bozo
Bozo   |     |   Comment #47
A $1,000 CD is worth $1,000, whether it pays 1% or 10% interest.

Every FI statement lists the value as $1,000. So, I am either right, or they are all committing bank fraud.

Check the prices on secondary CDs. They ALL sell for $1,000 because the value DOES NOT CHANGE. Can't be any clearer.
alan1
alan1   |     |   Comment #48
Bozo: You make the following claim re CDs in the secondary market:
"They ALL sell for $1,000 because the value DOES NOT CHANGE." (caps in original)

No -- they do not all sell for $1000 -- they are sold in units of $1000 par value. I just checked Vanguard's secondary listings. There's a Morgan Stanley CD, maturing May 31, 2023 (that's a duration of just under 5 years), with a coupon of 3.250. The price is 99.300 (pre-commission). The yield to maturity is 3.404 (pre-cmmisssion).

The price of a $1000 CD will be $993.00, not including any fees or commissions. And the price and value will fluctuate over the years. As you write: "Can't be any clearer."
???
???   |     |   Comment #50
when i got secondary CDs way back when ( dont remember if they were from broker office or private seller through different means ) i think we had to pay the seller all interest earned and then kept the interest from then on.

comment?
DOA
DOA   |     |   Comment #54
Bozo,

I think it is about time for one of your usual riddles. Maybe duration would be a good topic.
Bozo
Bozo   |     |   Comment #55
DOA, aside from the fact that Bozo impersonators are back (you can tell if it's me by scrolling over my name; if it highlights, it's me);

"Duration is inscrutable, of that we can be sure;
Your interest rate inflexible, for CDs that is pure,
Certainty is relative, just like alternative facts,
But CDs, like so many things, are merely obvious facts."

Burma Shave
111
111   |     |   Comment #59
Re. the Bozo impersonators, it's curious that their recent rise coincides with the recent apparent decline of the "Granny" consortiums (consortia?).

Are they the same individual(s)? Has anyone ever seen them together in person, or in the same photograph? Or has one organism simply morphed into the other, kind of like the old Andromeda Strain movie?

Enquiring minds want to know!
JimDavis
JimDavis   |     |   Comment #60
Nope, secondaries certainly trade like govt bonds, moving with the current interest rate. The only time they are 'worth' 1000 is as a new issue.
mike
mike   |     |   Comment #22
I pushed my stack in, both IRA and personal savings when Penfed offered a10 year 5 % CD. The CDs will mature in 2021.

I hope Penfed will have competitive rates by then, otherwise I will be moving my $ elsewhere.
Mak
Mak   |     |   Comment #35
If you don't have much money saved laddering doesn't really matter imo but if you have quite a bit saved laddering makes more sense.
Bozo
Bozo   |     |   Comment #57
Mak (re comment #35)

"Whether much or a little, think not your fund a spittle;
We started with a tad, then grew with oh so glad.
Smallish funds grow to fortunes, think merely of Buffett,
Others are quite so sad."
Bozo
Bozo   |     |   Comment #61
I only opine, with a rhyme, in its time,
And PenFed is an easy target.
Unless you are old, with an IRA and quite bold,
You can basically, well, forget about it.

Burma Shave
DCGuy
DCGuy   |     |   Comment #64
Today I am receiving "this page cannot be displayed" messages when I try to log into my Pen Fed account after entering my user name. Anyone else having this problem?
DOA
DOA   |     |   Comment #65
Try clearing your history on your browser. Sometimes that works on log in problems.
DCGuy
DCGuy   |     |   Comment #66
I am able to log in today. Not sure why it was a problem yesterday.
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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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Availability: Easy membership requirement

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Availability: Easy membership requirement

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Availability: Easy membership requirement

PenFed Credit Union (PenFed) increased the rates on all of its Money Market Certificates (CDs) today. PenFed typically changes rates at the start of each month, so this increase is a good sign that PenFed saw the need to do another rate hike so soon after its October 1st increase. The new rates aren’t exceptional, but they are competitive. The most competitive ones are the 18-month CD (1.77% APY) and the 12-month...

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Availability: Easy membership requirement

Many banks and credit unions having been coming out with higher rates today (see Forum). While it is common for credit unions like PenFed Credit Union (PenFed) to change rates on the first of the month, the number of institutions increasing rates seems a little higher than normal. Perhaps the last Fed rate hike is starting to have an effect.

Today’s rate increases at PenFed aren’t impressive, but it’s nice to see...

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