Update: The reservation period is now scheduled to end on 9/30/2010.
It has been over a month since I first reported on PenFed's Watch it Grow CD promotion which offers special CD rates of up to 5.00% APY. As I mentioned, this promo was intended for only a select portion of the PenFed membership. However, PenFed's online interface had some issues which allowed PenFed members who didn't qualify to participate in the promo. PenFed eventually removed these backdoor methods to participate. There were worries that PenFed may decide not to honor the CD reservations made by those who didn't qualify. To help ease these worries, I emailed my PenFed contact. I'm happy to report that they do plan to honor these CD reservations. Here is an excerpt of the reply that I received:
The main intention of the Watch it Grow CD promotion allows existing members with certificates maturing in October to have the opportunity to open a new certificate in January 2011 at a higher rate on a 5, 7 and 10-year certificate.
The issue that existed on our online interface that allowed folks to participate in the promotion even though they did not meet the promotional criteria was rectified by our IT team earlier this month. It is PenFed’s intent to honor all online certificate reservations made by these individuals prior to the September 4, 2010 interface fix.
If you have any concerns about your PenFed CDs, you should give PenFed a call. If the PenFed's Members Service Representative is unable to handle your problem, you can request to speak with a supervisor.
As I mentioned, the backdoor methods to participate have been closed. So it appears that only those who have maturing PenFed CDs will be able to participate. However, it will only last until 10/31/10 or until PenFed reaches its reservation target of $240 million. I just logged into my PenFed account to check how much money has been reserved. As of this morning, $148,637,726 is still available for the promotion.
I also confirmed with my PenFed contact the 10-year CD early withdrawal penalty. As I reported in my previous post, the penalty is the same as the 7-year CD penalty: up to 365 days of dividends. For those who don't qualify for this offer, you may have a chance to open PenFed's new 10-year CD in January. I was told January is the target month to make this 10-year CD public, but it could be delayed. The rate won't be known until the Board makes the decision before the launch date.
PenFed's CD rates fell in September, but its 5-year and 7-year CD rates remain very competitive. Please refer to my PenFed CD review for more details.