It’s been a long 2½ years since I last wrote about Certificate rate increases at PenFed Credit Union (PenFed), so I was pleased to see across-the-board rate increases on PenFed’s Money Market Certificates (MMC). While the majority of the MMCs saw modest increases of 10 bps, the 15-month MMC rate increased from 0.45% APY to 0.75% APY, making it the most competitive MMC in PenFed’s product line. The minimum opening deposit for any MMC is $1k, with no stated balance cap.
All of the “Year” term-length MMCs are available as IRAs (Traditional, Roth, and CESA), but with APYs a uniform 5 bps lower.
PenFed has a long history of competitive MCC rates. Many DA readers took advantage of the promotional 10-year MMC (5.00% APY) offered by PenFed in late 2010 and early 2011. Other great deals occurred in late 2013 and early 2014 when PenFed offered 5-year and 7-year MCCs earning 3.04% APY. These fabled MMCs serve as the touchstone when discussing hot CD deals.
I think many of us hoped (believed) PenFed would offer something fantastically competitive in late 2020/early 2021 to keep the millions of dollars deposited in the 7-year and 10-year MMCs in-house following maturity. Unfortunately, our collective hopes were not met.
As stated on the done Money Market Certificate page, the Early Withdrawal Penalty (EWP) for terms greater than six months reads as follows:
Within 365 days from the open date of the certificate, the penalty will be the last 365 days of dividends earned.
After 365 days from the open date of the certificate have elapsed, the penalty will be 30% of gross amount of dividends that would have been earned if the certificate had reached maturity.
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 MCCs for members over the age of 59 1/2. The following is an excerpt from the IRA MCC 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 MCC rates bps lower than its standard MCCs.
Headquartered just outside the Beltway in McLean, Virginia, PenFed Credit Union’s field of membership (FOM) has been open to almost every U.S. citizen or resident alien for many years, with a laundry list of ways to qualify. For those who didn’t qualify through residency, employment, or military relationship, joining one of two charitable organizations provided a route to PenFed membership.
Qualifying for PenFed membership has become much simpler: according to CSR, the only requirement is depositing $5 in a Savings/Share account.
The online application still lists five membership requirements (residency, employment, and military relationship) but the sixth requirement reads,
None of the above apply, but I would like to join PenFed.
I expected to see a drop-down showing the qualifying organizations, but there is none. CSR explained the drop-down was removed when the FOM changed.
Joining PenFed and/or opening a Money Market Certificate can done online or at any of the 38 full-service branches located in California, the District of Columbia (3), Florida (3), Georgia (2), Hawaii (3), Maryland, North Carolina, Nebraska, 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.
Credit Union Overview
PenFed Credit Union has an overall health grade of "A+" at DepositAccounts.com, with a Texas Ratio of 3.30% (excellent), based on March 31, 2021 data. In the past year, PenFed has increased its total non-brokered deposits by $2.22 billion, an excellent annual growth rate of 12.35%. 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 fourth largest credit union in the nation, with more than 2,230,000 members and assets in excess of $27 billion.
How the Money Market Certificate Compares
When compared to 143 similar length-of-term CDs tracked by DepositAccounts.com that are nationally available and require a similar minimum deposit, PenFed Credit Union's 15-month Money Market Certificate APY currently shares the top spot with Evansville Teachers Federal Credit Union’s 18-month CD APY.
The above information and rates are accurate as of 7/3/2021.
To searching for the best CD rates, both nationwide and in your state? Please refer to CD Rates Table page.