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Updates on Penfed and its 6.25% CDs


Thanks to everyone who has left comments regarding Penfed. Several useful details have been provided. I thought it would be useful to consolidate this information into a new post. I was able to receive some confirmation of these by calling. But some details like hard credit pulls are not fully understood even by the CSRs, so please be aware that your experiences may differ.

For the main details of Penfed, joining Penfed and Penfed's new 6.25% CD, please refer to this post. Please refer to Penfed's website for the official details. Below is a list of additional details and observations that I received from readers along with my inputs:
  • Funding the Savings Account - When I joined in September, only the credit card option was available to fund the share savings account online. Readers are reporting that you now can fund savings account with an ACH transfer or check in addition to a credit card. Also, you can use a debit/check card instead of a credit card to fund the savings account. Only $5 is the required minimum deposit for the savings account.
  • Hard Credit Inquiry - A hard credit pull is done when you open your share savings account (when you join). I was told that no additional hard pulls are done for opening CDs. They will also do a hard pull for checking accounts, loans and credit cards. I just checked by credit report at Equifax and there was just one hard pull done by Penfed when I first joined. It did not show any hard pulls for the two CDs that I purchased so this seems to confirm what I was told by the CSR. One reader mentioned the following:
    A CSR confirmed today, that Hard credit pull is done to almost everyone opening CD by calling CSR and or opening online with amounts > 10K. Also, they run hard credit pull on every 9th or 10th customer as required by law, for quality control purposes.
    Another reader mentioned this:
    They do a hard pull for opening an account, but they use the same pull for 60 days. So if you bite the bullet and take the hard for opening a share account, they will use that same hard (ie not initiate a 2nd hard pull) for a credit card app. So anyone planning to apply for membership via a share account should seriously consider applying for the 1.25% credit card at the same time.
    Note, the hard pull may lower your FICO score by about 5 points. The effect should be removed in about 6 months.
  • Avoiding the $20 Fee - You may qualify for Penfed membership without having to join NMFA (and paying the $20 fee) if you have an immediate family member who qualifies. The family member does not need to be a Penfed member. For example if your dad receives retirement benefits from the Army and isn't a Penfed member, you are eligible.
  • How Quickly Can a CD be Opened - A reader asked if you have to return the signature card after you join before you can open a CD. I was able to open a CD in September before I sent back the signature card. You just need to be able to log in to open the CD online. A reader mentioned that he had to call to receive the PIN that allowed online access.
  • Maximum Deposit - The maximum deposit when funding the CD using the online application is $10K. I was told that this cap is removed after you're a member for 6 months. You can go above this by opening the CD by phone. A reader reported opening a $100K CD by phone by giving the CSR his bank's routing number, his account number and check number.
  • Special IRA Provisions - If you're over 59 1/2 years of age, you can change your IRA CD without penalty. A reader reported that he changed a 3.5% CD with a year left to a new 6.25% rate in a matter of minutes with no penalties.
  • Safety - Bauer Financial's rating of Penfed is 5 out of 5 stars (superior) based on September 30, 2006 financial data. Bankrate.com's rating is 3 out of 5 stars (performing) and is also based on September 30, 2006 financial data. I'm not sure why there's this much discrepancy or how significant this is. As I mentioned before, Penfed is federally insured by the NCUA.
  • How Long Will It Last? - A reader noted that Penfed has been coming out with very high long-term CD rates this time of year for the last 3 years, and this is likely the time of the year in which they build their funds. In the past these rates have continued for a few months into the new year.

Regarding the last point, Penfed came out last year with a 6% 7-year CD, a 5.75 5-year CD and a 5.50% 3/4-year CD at the end of December (see post). For comparison, the best 60-month CD that was listed at Bankrate.com at that time was 5.15%. Thus, the current 6.25% CD rate shouldn't be considered unusual. Based on history the rate should last for a few months. However, with more people using the internet for banking and interest rates likely to fall next year, there could be more demand for these CDs than what Penfed has experienced in the past. So you may not want to wait to after January.
Anonymous   |     |   Comment #1
An excellent summary; thanks. But after yesterday's reports I have to wonder about the direction of interest rates in the upcoming six months. There's an even shot, IMHO, that rates could be headed up here, and not down. At worst, they might remain level. Am just not seeing the predicate for falling rates.
Again, the above JMHO and no more. Wish I had the crystal ball. My buddy down the street borrowed it and he still has not returned it.
Anonymous   |     |   Comment #2
Sorry for basic questions:

1) What are types of credit pulls?

2) What is a "hard pull"?

If this is answered already, pls give link to previous discussion.

Anonymous   |     |   Comment #3
Google my friends. Just like in college, researching on your own in a library is your responsibility, not the professor's nor anyone else but YOU!
Anonymous   |     |   Comment #4
No problem if somebody asks basic questions. You can use link below to know Hard vs Soft:

Anonymous   |     |   Comment #5
The link did not come thru completely.

Here it is in pieces:

Anonymous   |     |   Comment #6
How do you open a Money Market Certificate account > $10,000 ?

I was told over the phone that this is not possible.
mh   |     |   Comment #7
Sure you can open a >10K CD. I did. You just won't be able to fund it via ACH. Your funding options are mailing in a check, wire transfer into PenFed, or by "SpeedPay". I did it by SpeedPay, which is essentially billpay by electronic check. You give the CSR your bank's routing number, account number, and a check number. That's it. It took less than 10 minutes to open my CD. One heads up though. When I initially called PenFed, the CSR told me the SpeedPay method costs $5 to process. But when I called back a little later to actually open the CD, another CSR said she doesn't charge the $5 fee for CDs. So there was no fee to open my CD this way. Much more economical than by wire transfer.
Banking Guy
Banking Guy   |     |   Comment #8
Thanks for the link on the credit pulls. Here's the lending tree html link

mh, thanks for the info on Penfed's SpeedPay.

I had to remove the first comment. Please do not discuss the ads which can be a violation of Google's policy. Unfortunately, blogger does not allow editing of a comment. The comment did provide useful information which I copied below. These comments are much appreciated.

I opened a CD for $250,000 in September. My money was in a Money Market account, so I did a $20 wire transfer and actually earned interest in both accounts for that one day. I’m thinking of putting $100,000 more in a 7-year CD.

I did have one problem with the PFCU and called them a few days ago. When I opened the account, they asked me if I wanted a checking account, and I said, yes. They mailed me an application, which I never returned. Obviously, I did not get any checks, but on my last statement, they charged me a fee of $7.50 for my account being below $500. I told them on the phone that I did not want a checking account now, and the representative removed the fee immediately! I am very impressed with the customer service at PFCU!
Anonymous   |     |   Comment #9
A credit card is still the only available option to fund the share savings account online. It also still states that this will be treated as a cash advance. You're only given a choice between Visa or Mastercard. Since my credit card charges a minimum of $10 for a cash advance, this seems like an expense way to deposit $5 in a savings account.
Anonymous   |     |   Comment #10
A credit card is still the only available option to fund the share savings account online. It also still states that this will be treated as a cash advance. You're only given a choice between Visa or Mastercard. Since my credit card charges a minimum of $10 for a cash advance, this seems like an expense way to deposit $5 in a savings account.
Anonymous   |     |   Comment #11
My $25 deposit charge on Chase Cash Plus Reward card was shown on the statement today. It was counted as purchase rather than cash advance. Please post if other credit card did so.
Anonymous   |     |   Comment #12
I feel uneasy about sending a large amount of money-74K from CA to Virginia? What if there are problems? Penfed was recently dropped from 5 stars to 3 by Bankrate. Plus customer service is not what it used to be anywhere-as mistakes and misinformation seem to happen more.
Anonymous   |     |   Comment #13
Penfed allows 3 choices to fund your share savings account online.

The first is a credit card transaction (cash advance).

Next is an ACH transaction from another account. You'll need to provide the account and routing numbers.

Lastly, you can fund your share savings account by sending a check.
Anonymous   |     |   Comment #14
How do you withdraw your money in your PFCU share savings without apply to their checking account. I live in NY and transfered too much fund (just below $1k) into share savings account.

Banking Guy
Banking Guy   |     |   Comment #15
New lower rates have replaced these 6.25% yields as of February 1, 2007. Please refer to this new post for more info.