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5% CDs at Pentagon Federal Credit Union - Nationally Available


Pentagon Federal Credit Union made some substantial rate increases today on its long-term certificates. The new yield is 5.00% APY for terms of 3, 4, 5 and 7 years. The minimum deposit is $1,000, and these are also available in an IRA. PenFed typically keeps the CD rates unchanged for a month. They used to list the end date at the bottom of the rate table, but they ended this after their 6% CD special last year. That was the first time that I can remember PenFed ending the CD rates before the end of the month. After that, they stopped including an end date in the table.

Update 10/2/08: PenFed sent an email about this CD promotion and stated that money must be on deposit by 10/31/2008.

In previous years PenFed has often offered excellent rates on its long-term CDs. The best recent deal was a 6.25% APY 3-year CD in early 2007. This year PenFed's CD rates have lagged behind the CD rates of many banks. These new PenFed rates are not quite as good as the 2007 specials, but as you can see from my weekly rate summary, a 5% 3-year CD is very competitive.

For more details about PenFed's CDs and joining PenFed, please refer to this PenFed review post. PenFed makes it easy for anyone to join and open accounts online. If you don't qualify based on military, employer or family, you can become eligible by joining the National Military Family Association (NMFA). Please refer to How to Join Overview Page for details. Joining NMFA and Penfed can be done at the same time all online. The yearly membership for NMFA is $20, but your membership in the association does not need to be maintained to continue as a Penfed member

In addition to high CD rates, PenFed has several other competitive banking products including a cash back Visa credit card with 5% cash back for gas purchases and auto loans with very low rates (see post).

PenFed's financial rating for soundness at Bankrate.com has improved since last year. It's now 4 stars (sound) based on 6/30/08 data (up from 3 stars last year). PenFed's rating at BauerFinancial remains at 5 stars (superior) based on 6/30/08 data.

PenFed is one of the largest credit unions in the US with $12.2 billion in assets and 825,527 members. It's federally insured by the NCUA (Charter # 227).

Thanks to the reader who mentioned this rate update in the finding-the-best-deals post.
Related Pages: CD rates, IRA rates

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Anonymous   |     |   Comment #1
I got all excited when I saw the 5%CD with PenFed until I saw the time restrains(3+ yrs).
I have the 6.25% CD from previous times and it matures in 1/10. I think I will wait for shorter time or higher rate.
Anonymous   |     |   Comment #2
Yeah, I agree. Afterall, you can 5.25% with National City for 36 months CD. Just need to stay within the limt to be on the safe side.
Anonymous   |     |   Comment #3
For the current 5% CD promotion at PenFed, money must be on deposit by 10/31/2008.
Anonymous   |     |   Comment #4
Hello everyone:

Thanks to the Banking Guy's always reporting the best deals, in October 2007 I considered myself lucky to have opened three accounts with Pentagon Federal Credit Union... at 6%!!!

But soon - very soon - I discovered that they made "errors" that caused me serious financial consequences to say nothing of the time consuming in checking things and writing the supervisor and the president... PLUS the terrible aggravation. Errors that are inexplicable and not even admitted by them to mitigate my anger.

If anyonne wishes to know the details I'll send them to them on request (to their emails?). Just thought I'd alert you to my experience which, true, it may not be the same as with others. :o)
Bozo   |     |   Comment #5
To: Retirees > 59 1/2
Re: PenFed IRA Partial Withdrawals

There is some ambiguous language on the IRA page at PenFed's website regarding partial withdrawals from IRAs. The "asterisk" footnote implies that, for IRAs opened after September 1, 2007, there is an early withdrawal penalty for even partial withdrawals from an IRA if you are over 59 1/2. If you read the fine print in the Account Disclosure (section XIII, subparagraph 4(g)(3)(iv)), there is a specific exception for partial withdrawals for those over 59 1/2 (i.e., no penalty). I verified this with CSR "Marcella" in a telephone conversation today.

Bottom line: You can put any amount you like in a 5% IRA CD, then "nibble" at it as you wish over the term of the IRA without penalty for early withdrawal or re-setting of the interest rate. This is the same deal I have with State Farm Bank, but the interest rate at PenFed is higher. I wish I'd done more research before I rolled over my 2 year CD with State Farm at 4.2%. For the record, however, I submitted a partial withdrawal request to State Farm last week (mailed it 9/26), the check was cut 9/30 and received in the mail today. That's pretty good service.

To Anon at 12:12 PM today, what sort of problem did you have with PenFed (in a nutshell)? Just curious.


Anonymous   |     |   Comment #6
"To Anon at 12:12 PM today, what sort of problem did you have with PenFed (in a nutshell)? Just curious. Bozo"

Hello Bozo,it's kind of difficult to make it more "in a nutshell" than I already made it, and I'm kind of reluctant to publicize the details. You got an email for just junk? I'll be glad to email them to you.
Nistuj   |     |   Comment #7
Anon, in a nutshell would actually include SOME details, not vague allusions.

What sort of problems did you encounter?