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New High Yield CDs From Penfed? 6.00%?


Update 10/13/07: The 3, 4, 5 and 7 year CD rates are now 5% APY.

I can't officially confirm these yet, but I've been told that Pentagon Federal Credit Union (Penfed) will be coming out tomorrow with some high yield certificates for terms of 3 to 7 years. I've read rumors that the yield may be 6.00% APY. According to my contact, these rates will likely not last the usual month. Perhaps they're anticipating the strong demand that will likley exist now that interest rates are falling.

Earlier this year Penfed offered 6.25% APY on its long term CDs. I was able to take advantage of those CDs along with 6% CDs that they offered about a year ago. You can read about my experiences with Penfed along with all the details about these CDs and membership in my January Penfed post. You can become eligible for membership by joining an association for $20. Penfed use to have a really nice feature on its IRA CDs for those over 59.5 years of age, but this has now ended. Please refer to this post for more details.

Penfed is federally insured by the NCUA (Charter # 227). It's one of the nations largest credit unions with assets of $10.4 billion and 757,956 members.
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glxpass   |     |   Comment #1
I was told by a mortgage CSR yesterday (Tues) that the 6% CDs were expected to be avail. Thurs and offer terms of 3, 4, 5, and 7 years. We'll see tomorrow!
Paul   |     |   Comment #2
Why would they do this?? HSBC just cut their online savings rate to 4.5% by the way.
SVG   |     |   Comment #3
Banking Guy,

If true ... it will be a very good deal.

I'm going to take stock of my liquid cash tonight to find out how much I can pour into PenFed certificates. Will need to decide how to distribute the cash in 2/3/5/7 years certificates ...

Haven't seen anything 'attractive' this year from DCU ... would be nice if they come out with something special after PenFed.

Anonymous   |     |   Comment #4
i called tonight and the csa said that the 6% cd rates are confirmed and will be posted on there website tomorrow. time to buy folks!
Anonymous   |     |   Comment #5
banking guy if your still there do you think its a good idea to lock in for 3 years. after all the feds could start to raise there rates soon
Anonymous   |     |   Comment #6
6% CD already posted on their website.
Anonymous   |     |   Comment #7
It is official - it is on their site now. 3, 4, 5 and 7 year CDs are all at 6%. The rate is good until 10/31/07. Thank you for the heads-up!
SVG   |     |   Comment #8

Banking Guy,

It's official !

It is half-past midnight, and I see the new rates posted.


Anonymous   |     |   Comment #9
Will the CD be available as an IRA? Since IRAs provide $250,000 in insurance, that would be a way to increase coverage for those who already have CDs at PenFed that have been maxed out on insurance coverage through a combination of individual owner & eligible PODs.
Anonymous   |     |   Comment #10
Now the question is: 3 years or 7 years?
Anonymous   |     |   Comment #11
How do they do this ? , their car loan is 5.99%

How much insurance can i get wife , myself and 2 kids, 800k

Thanks for this great info..
Anonymous   |     |   Comment #12
Be careful!! I just bought a certificate online and after completing the application, I only received a rate of 5% APY. I think they haven't updated their online system yet so you should wait until they fix this problem.
Anonymous   |     |   Comment #13
3-Year 5.83% 6.00%

4-Year 5.83% 6.00%

5-Year 5.83% 6.00%

7-Year 5.83% 6.00%

$1,000 minimum deposit

Effective September 27, 2007 - October 31, 2007

APY = Annual Percentage Yield
Anonymous   |     |   Comment #14
you pod wife
you pod 1 kid
you pod 2 kid
you-wife pod kid1
you-wife pod kid2
Anonymous   |     |   Comment #15
Should add that will insure 600k
Anonymous   |     |   Comment #16
Even though their rates are posted tonight, they don't take effect until after midnight Pacific time (in other words, when it is Thursday in all states but Alaska and Hawaii). So if you bought a CD online and discovered that you got the old rate, give them a call.
Anonymous   |     |   Comment #17
If you think inflation is going to run rampant because the fed is goiong to keep cutting to prop up asset prices, then you might want to think twice about a 6% multiyear CD.

If the long bond yied just keeps going up as it will in an inflationary environment, this long term 6% rate might not look like such a good deal as compared to bonds.
Anonymous   |     |   Comment #18
Just to clarify, if you think that long-term interest rates are headed upward, it would be a horrible idea to buy any bonds or bond funds right now. The value of bonds sinks as interest rates rise. If you buy a bond fund, the share prices are going to fall and you will lose money. If you buy an individual bond, you have a choice of either selling it for a loss or hanging on till maturity with the low interest rate, just like a CD.

The only difference is that you know what the maximum loss with a CD that is redeemed early will be: 6 months of interest for a 3-5 year CD and 12 months for a 7 year CD. On a 6% CD, this means your maximum loss is 3% or 6% of the CD value if you want to redeem it early. On a bond, there is no limit to the loss if you want to sell early and interest rates have soared.

Think twice about buying long-term CDs or bonds if you think interest rates are rising.
ProfessorB   |     |   Comment #19
The early withdrawal penalty is 6 months of interest.
Anonymous   |     |   Comment #20
If this APY were being offered at two years I'd be all over this deal. Three years is marginal and I'll probably stay out. Anything longer than that is just a bad idea. The new POTUS takes office 1/09 with a fresh Congress. Soon thereafter, if not before, things will change.