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Joining Penfed and Purchasing a Money Market Certificate


This week I went through the process of becoming a member at Pentagon Federal Credit Union (Penfed) and purchasing a 3-year 6% APY Money Market Certificate. I wouldn't suggest putting all of your money into a long-term CD, but with long-term rates falling over the last couple of months, locking some of your money into a 6% CD is something to consider. These 6% Penfed CDs are guaranteed to last through September 27th. After that, it's hard to say if they'll continue. I thought it would be useful to describe the application process. One thing that's nice with Penfed is that the membership application and purchasing a CD can all be done online. The process went smoothly for me.

Penfed Online Membership Application

If you are not eligible to join through various military affiliations, you can become eligible by joining the NMFA association with a one-time fee of $20. Joining NMFA and Penfed can be done at the same time all online.

You might want to first see if you are eligible without NMFA membership. If you're not already eligible, you can join both the NMFA and Penfed online at the same time.

After agreeing to the terms, it takes you to the funding page. Unfortunately, you can only fund the NMFA membership and a Penfed savings account with a credit card. They make it clear that the funding of the savings account will be considered a cash advance. However, you only have to fund it with $5, so it shouldn't be much of a cash advance fee.

You then select your PIN number. They give you the membership number.

Once the application is complete, it informs you that they'll be mailing the account opening materials to your home address. It took 3 days for it to reach my home. It contains a signature card for you to sign and a postage-paid envelope.

Even though the application states that your share account will not be valid until they receive your signed form, you can immediately access your account with the PIN you just selected and the membership number they provided.

Purchasing a CD Online

Once you log in, you can select the option from the main menu to open an account. From here you can purchase a CD (what Penfed calls a Money Market Certificate).

Some of the options provided by the online CD application include:
  • Beneficiaries for a POD account.
  • One of three interest payment options. These options include adding it back to the principal, depositing into your Penfed account or sending you a check.
  • One of three payment options at maturity. You can have it automatically renew, have it transfered to your Penfed account or request a check be sent to you.
  • One of two ways to fund the CD online: ACH transfer from another financial institution or by credit card

The ACH transfer option allows you to choose your checking or savings account of another financial institution. You have to enter the bank's routing number and your account number of that bank. The other option is to use a credit card. Both funding options have a limit of $10K. I was told that this can be extended if you call. I'm not sure about these details.

I definitely didn't want to be hit with a cash advance fee on a large amount, so I chose the ACH transfer option and used a high yield savings account as the source. This way the money will continue to earn a high rate of interest until it's debited.

At the end of the application, it states that the certificate agreement will be mailed within 5-7 business days.

In addition to purchasing the CD online, you can fill out the application and mail it in along with your check. You can also purchase it over the phone. Refer to Penfed's Money Market Certificates page for more details and refer to my previous post for more general information on Penfed and these CDs.
Anonymous   |     |   Comment #1
I just filled out the online form to apply for membership. Wondering if there are monthly fees associated with this account.
Frugal Frugalson
Frugal Frugalson   |     |   Comment #2
Nice write up on a quality credit union! I added a link to this in my post detailing the Penfed CD I opened this morning.
Banking Guy
Banking Guy   |     |   Comment #3
I pretty sure there are no monthly fees associated with the savings account. There is a monthly fee on the checking account if you fall below $500 or you don't have direct deposit.

Thanks frugal for the link!

I received the following comment from a reader who has an IRA with Penfed:

"Have been a cusotomer of Pentagon Federal Credit Union for a few years now. A wonderful benefit of having your IRA there is that if you are 59 1/2 and the rates go up you just call them and they will redo you IRA's without penalty for the higher rate. Also when you take out of the IRA they like most banks do not penalize you if you take out of your CD if you are 59 1/2. Have not taken out of the IRA's yet but have raised the rates on some of the 5 1/2 CD's we have had with them to 6 last jan."
Anonymous   |     |   Comment #4
Does anyone have an opinion about going over the insured amount with penfed? I spoke t them a while back and they claim to be the strongest credit union in the world and that people think nothing of putting $300,000 into a cd without blinking an eyelash although they weren't urging me to go one way or another.