I was pleasantly surprised to see the new certificate rates at Pentagon Federal Credit Union (PenFed) for November. Rates went up for terms of 1 to 4 years. In fact, the new 1-, 2- and 3-year CD rates are very competitive. This is different than past PenFed CD promotions in which the best deals have been for the longer terms. Below is the list of the new PenFed CD rates for terms of 1 to 7 years with the noteworthy rates highlighted. I've also listed the old rates in parentheses. These new rates are listed in PenFed's Money Market Certificates page as of 11/1/2012.
- 2.02% APY 7-year CD (no change)
- 1.71% APY 5-year CD (no change)
- 1.61% APY 4-year CD (was 1.51%)
- 1.61% APY 3-year CD (was 1.25%)
- 1.36% APY 2-year CD (was 0.99%)
- 1.26% APY 1-year CD (was 0.90%)
PenFed calls their CDs "Money Market Certificates", but they are essentially certificates of deposit (CD) with fixed rates for specific terms.
Minimum deposit is $1,000. The rates are also available in an IRA. Even though PenFed typically maintains CD rates through the month, they no longer guarantee it. For more details about PenFed CDs, please refer to my PenFed CD review.
One advantage of PenFed shorter-term CDs is a smaller early withdrawal penalty. CDs with terms from 1 to 4 years have an early withdrawal penalty of up to 180 days of dividends. CDs with terms of 5 or 7 years have a EWP of up to 365 days of dividends. Note, the penalty doesn't eat into the principal so if you redeem the 5-year CD before 365 days from the issue date, you'll just lose all of the accrued interest. Please refer to PenFed's disclosure for more details (bottom of PenFed's Money Market Certificate page).
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 (one-time $20 fee) or by joining the Voices for America's Troops (one-time $15 fee). Joining one of these organizations and joining PenFed can be done at the same time all online.
To join PenFed, click on the "Join PenFed" link at the top of any PenFed page. This will take you to the start of the online application. That first page asks about eligibility. If you don't qualify via any of the listed options, click "None of the above". A popup informs users that "We can establish your membership eligibility through either National Military Family Association or Voices for America's Troops." When you close the popup, you are then asked to select one of these two organizations.
Accounts can be opened online, but for those who prefer opening accounts in an office, PenFed has branches in several parts of the country including Washington DC, Maryland, Virginia, New York, North Carolina, Hawaii, Puerto Rico and Texas.
PenFed is the third largest credit union in the nation. It has $12 billion in deposits. PenFed has an overall health score at DepositAccounts.com of 5 stars (out of 5) with a Texas Ratio of 3.48% (excellent) based on June 2012 data. Please refer to our financial overview of PenFed for more details. It's federally insured by the NCUA (Charter # 227).
How These New CD Rates Compare
PenFed has a long history of being a rate leader for long-term CDs, but its short-term CDs have rarely been on top. With these new rates, PenFed is on top or near the top for 1-, 2- and 3-year terms.
PenFed's 1.26% APY 1-year CD is now the highest 1-year CD rate that's nationally available. The next highest is 1.12% APY at Airbanking.
For a 2-year term, Sandia Laboratory FCU has the highest CD yield of 1.51% APY, but this requires a $200K minimum. The yields for a $100K minimum is 1.41% and the yield for a $50K minimum is 1.31%.
For a 3-year term, PenFed is tied with Sandia Laboratory FCU with a 1.61% APY. The highest yield is 1.75% APY at Connexus Credit Union, but this requires an active checking account.
The above rates are accurate as of 11/1/2012.
Searching for the Best CD Rates
To search for the best nationwide rates and the best rates in your state, please refer to the following tables at DepositAccounts.com:
Edit: Corrected branch locations.