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 and are effective as of 12/1/2018. The previous APYs are noted inside parentheses.
- 84 mo - 3.50% (3.30%)
- 60 mo - 3.50% (3.30%)
- 48 mo - 3.15% (2.90%)
- 36 mo - 3.05% (2.85%)
- 24 mo - 2.95% (2.80%)
- 18 mo - 2.90% (2.75%)
- 15 mo - 2.85% (2.71%)
- 12 mo - 2.80% (2.71%)
- 6 mo - 2.40% (2.30%)
As many DA readers know, this is the 5-year anniversary of PenFed’s hot CD deals, including the fabled 3.04% APY offered on the 5-year MMC. It was the hottest deal around at the time: the highest rate offered then on a 5-year CD by an internet bank was only 2.11% APY. To put that PenFed deal in perspective, an equivalent offering today would be something like a 4.50% APY 5-year CD. While only available for two months (December 2013 and January 2014), the 3.04% APY 5-year MMC serves as the touchstone when discussing hot deals.
I think many of us believed PenFed would offer something amazingly competitive in December, because there are millions of dollars in 5-year MMCs that will be maturing in the next two months. PenFed may have to come up a really compelling deal to keep those deposits in-house.
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 readers, alan1 and RateRover, for their Forum posts about PenFed’s December rate increases.
Premium Online Savings
PenFed also raised the rate on its Premium Online Savings account to 2.00% APY on balances up to $100k. According to the Savings Account Disclosure, “Amounts over $100,000 do not earn dividends.” Since the Premium Online Savings account was unveiled three months ago, there have been two rate increases, adding a total of 35 bps.
The Premium Online Savings page lists a few FAQs, including,
What is the maximum amount I can transfer?
There is an incoming and outgoing transfer limit of $5,000 per day and $50,000 per rolling 30 day period for transfers you initiate at PenFed.
If you would like to deposit more funds into your account please contact your other bank and send us a Wire or initiate a transfer at your other bank.
To withdraw more funds please initiate a transfer at your other bank, or call us to send a Wire.
Can I access my Premium Online Savings Account at an ATM?
Your Premium Online Savings Account is not accessible from an ATM. To access your savings from an ATM open a Regular Savings Account or a Money Market Savings Account.
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.
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 DepositAccounts.com, 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 180 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 third.
|Interest Rate||CD Length of Term||Credit Union/Bank|
|3.60% APY||60+ Month CD Special||Northpointe Bank|
|3.51% APY||5-Year CD||KS StateBank|
|3.50% APY||5-Year Money Market Certificate||PenFed Credit Union|
The above rates are accurate as of 12/1/2018.
To searching for the best CD rates, both nationwide and in your state? Please refer to CD Rates Table page.