The one-time CD rate leader, Pentagon Federal Credit Union (PenFed), made substantial rate increases on its long-term CD rates for September. However, the rates had been so low, the new CD rates are still far from the rate leaders. Nevertheless, it’s yet another sign that long-term CD rates are rising. Since so many DA readers are PenFed members, I thought it would be useful to review the rate increases even though the new rates are not exciting. Below are the new rates as listed in PenFed’s certificates page and IRAs page as of 9/2/2013:
- 1.76% APY 7-year CD (was 1.25% APY)
- 1.56% APY 5-year CD (was 1.15% APY)
- 1.41% APY 4-year CD (was 1.10% APY)
- 1.26% APY 3-year CD (was 0.94% APY)
- 1.00% APY 2-year CD (was 0.74% APY)
- 0.50% APY 1-year CD (no change)
- 0.30% APY 6-month CD (no IRA) (no change)
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. The early withdrawal penalty is up to 180 days of interest for terms from 1 year to 4 years. The penalty is up to 365 days of interest for terms of 5 and 7 years. The penalty doesn’t eat into the principal. For example, if you withdraw principal before 1 year on a 5-year CD, you’ll lose all interest but none of the principal.
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.
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.
Credit Union Overview
PenFed is the third largest credit union in the nation. It has $12.5 billion in deposits. PenFed has an overall health score at DepositAccounts.com of 5 stars (out of 5) with a Texas Ratio of 3.17% (excellent) based on June 2013 data. Please refer to our financial overview of PenFed for more details. It's federally insured by the NCUA (Charter # 227).
How These CD Rates Compare
These new PenFed CDs are still far from the rate leaders. Most of PenFed’s past CD promotions have took place around January. So perhaps they will again be leaders in a few months.
Internet bank CDs and brokered CDs currently offer the best long-term CD rates. The best 5-year CD rate is 2.05% APY at iGObanking.com as of 9/2/2013.
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: