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1.81%$1k-PenFed Credit Union4 Year Money Market Certificate
1.77%$1k-PenFed Credit Union4 Year IRA (Traditional, Roth)
1.76%$1k-PenFed Credit Union3 Year Money Market Certificate
1.71%$1k-PenFed Credit Union3 Year IRA (Traditional, Roth)
Accounts mentioned in this post. Rates as of August 20, 2017.

Update on PenFed’s Top CD Rates


The best CD deal that’s nationally available continues to be the 3-year and 4-year CDs and IRA CDs at PenFed. Both have a 2.02% APY as of 11/14/2013. I first reported on this news when these first came on November 1st. Thanks to readers who have shared their experiences opening these CDs in the comments in my November 1st PenFed CD post. For those not familiar with PenFed, I have details about how to join PenFed in that post.

PenFed’s CD rates typically last at least through the month. However, they don’t guarantee it. To review the details of these CDs, please refer to PenFed’s Money Market Certificates page. PenFed calls their CDs "Money Market Certificates", but they are essentially certificates of deposit (CD) with fixed rates for specific terms.

One thing I wanted to highlight about PenFed’s 3-year and 4-year CDs is the early withdrawal penalty. It’s only up to 180 days of interest. That’s less than half the EWP of both the 5-year and 7-year CD. You can see the impact of this if you close the CD early in our CD Early Withdrawal Penalty Calculator. I populated the calculator with the 3-, 4-, 5- and 7-year CDs.

There is currently one minor issue to note about our CD Early Withdrawal Penalty calculator and PenFed’s CDs. The effective APYs on PenFed’s CDs that are closed early can never be negative. A negative APY on a CD closed early implies that the penalty eats into the principal of the CD (the initial deposit amount). In summary, you come out with less money that you put in. However, you don’t have to worry about that with PenFed’s CDs. Below is an excerpt of PenFed’s disclosure as of 11/14/2013:

Certificates having a term greater than 6 months up to and including 4 years

If redeemed within 180 days of the issue date or any renewal date, all dividends will be forfeited

If redeemed thereafter, but before the maturity date, dividends for the most recent 180 days will be forfeited.

Certificates with a term of 5 years or greater;

(applies only to certificates issued or rolled over on 3/15/11 or later)

If redeemed within 365 days of the issue date or any renewal date, all dividends will be forfeited.

If redeemed thereafter, but before the maturity date, dividends for the most recent 365 days will be forfeited.

As you can see, the penalty can never exceed the interest that the CD earned. For example, if you close a 3-year CD after 2 months, you’ll lose all interest (2 months of interest). You won’t lose 6 months of interest (which would eat into the principal).

As we have discussed many times with CDs, there’s always the risk that financial institutions will not allow an early withdrawal or will increase an early withdrawal penalty on existing CDs. However, as you can see in the above excerpt, PenFed did the honorable thing when it raised the early withdrawal penalty on the 5-year CD. The larger penalty only applied to CDs issued or rolled over on 3/15/11 or later. This was after the larger penalty was announced. Thus, it didn’t affect existing CDs. I can’t say if this will always be repeated in the future, but it’s nice to see PenFed has a history of treating savers with respect.

Related Pages: CD rates, IRA rates

Related Posts

OldGuy   |     |   Comment #1
I have more money on deposit at PenFed, in both taxable CDs and IRA CDs, than at any other institution. I always go on to its website at 9:01 pm West Coast time on the last day of every month to see if it's offering special rates the next month.
Alskar   |     |   Comment #2
Note that PenFed does not allow partial withdrawals from their CDs.  That is, if you have a $100K CD and only need to withdraw $10K for some emergency, you will pay the EWP on the entire $100K and reinvest the remaining $90K in a new CD at the prevailing rate.  For this reason, I typically break my large investments at PenFed into smaller chunks, say $10-$20K per CD. 

If PenFed made changes in their EWP it must have been only on the shorter term CDs.  The 7 year CDs I purchased in Oct 2010 had an EWP of 365 days of interest or all of the accured interest if held for less than 365 days.  That is still true today. 
CC in CA
CC in CA   |     |   Comment #3
@Old Guy - that's funny. I do the exact same thing (check at 9:01pm Pacific Time on the last day of each month to see if PenFed's CD rates are changing)!  I wonder how many people do that?!?!

PenFed continues to be one of my all-time favorite institutions for deposit accounts.  Their online CD application process is the FASTEST and EASIEST application I've ever seen.  They are GREAT!!!
Shorebreak   |     |   Comment #4
I've been with PenFed going on 14 years now. I originally started with what they used to offer called a 5 Year Money Market Ladder Certificate. This product consisted of laddered certificates, each of equal funding, from 1 year out to 5 years. At that time the average rate was around 6% APY. Alas, now we are in the era of ZIRP.
Anonymous   |     |   Comment #5
If rates go up let's see if banks or CU's let you take you funds out before maturity.  I haven't read the disclosures but I'm sure they have an out or Obama can change the rules
Anonymous   |     |   Comment #6

"If you want your EWP, you can keep it.... Period"
paoli2   |     |   Comment #7
I called Penfed recently since next week I want to buy some of their 2% CDs and they assured me their rates will be good until 11/30/13.  I am putting the money into two seperate CDs for the same reason as #2 posted.  Many banks make you close the entire CD for a partial withdrawal so I always seperate the funds for "just in case".
Anonymous   |     |   Comment #8
If I had a need for funds for an emergency I would not lock them in a CD.  Find a savings account so you can quicky access the funds without penalty and only the amount you need.   I can't find a full disclosure doc but they probably have some out for allowing early withdrawls.  I'm sure the NUCA could change the rules to prevent runs on the CU's should ates go up Ally does have an out if you read their doc.  #6 a good one. 
paoli2   |     |   Comment #9
I had an odd experience recently while speaking to a banking rep about what the EWP would be on a certain CD.   She asked me if I usually use the EWP and why it was so important for me to know it.  I, thankfully, rarely had to cash in a CD early in all my years of having them but I always want to know what I am facing "if" something happens and I need my money back early.

Frankly, I think something is going on in the background with banks and they are trying to figure out what their customers will do if rates go up and how they should handle it.  This is why I feel it is so important to stick with banks or cus who are in really good standing financially.
Anonymous   |     |   Comment #10
If people run on banks because rates go up they will fail even if they are in good shape finacially.  This blog explores the use of getting a better rate for a shoter period of time by using the EWP clause of a CD based on the banks penalty.  Many banks (like Ally)  have the language to change terms at anytime (Ken has mentioned this).  I could see the goverment intervening to prevent the collapse of the banks and CU's and the agencies that insure them. The rates will go up like gasoline prices go down....   slowly   My mortgage is lower than my parents veterans mortgage that they took out in 1960 .  We have a debt of over 17 trillion dollars.  We have many social programs and pensions that are not funded propery.  I believe these are untested times.  Look what happend in Cyprus.
scottj   |     |   Comment #11
In my 20 or so years of doing CDs I have never broken one, kind of look at it like marriage that once you enter into it you stick with it.....well unless it's like my cheating **** first wife. But have yet really seen the need to break one since movement on rates over that time were pretty steady and finding the best deals on the CDs at the time  helped, no big jumps like we might see coming. Because of that chance I have not gone long on any new CDs, did a few of those 30 month 2% CDs and that tied up most of my liquid funds. That time frame is short enough that I would live with it till maturity. Also since I ladder always have over a dozens  CDs going and maturing at different times so I  will still be able to get in on new higher rates
Anonymous   |     |   Comment #23
#11 and #12..... If you are sitting on a 5 year cd that has a 2% yield and new 5 year cds go to 4% or 5%, are you going to want to break that cd if money wise it makes sense? Remember that would be cheating....hehe
Anonymous   |     |   Comment #12
I'm with you, scottj. Over 30 years of CDs, I have never cashed one out early.  CDs were never meant to be cashed and traded like stocks and bonds.
paoli2   |     |   Comment #13
#12 You are right that CDs were never meant to be traded like stocks etc. but by the same token, many people stick with CDs because they know they won't lose everything if something unexpected happens and they have to take advantage of the EWP.  I don't know about others but I have had unexpected terrible emergencies hit me in these past 10 years and I needed to cash out of a couple of CDs to help someone else.  It's not something I do as a game just when rates go up.  I have to have a really good reason to do the EWP.  If too many depositors do it, the banks will just add on more restrictions to everyone and then when one of us "really" needs the money for emergencies, we may pay a tough price to get it and the E in EWP may be changed to "Emergency" Withdrawal Penalties.
Anonymous   |     |   Comment #14
PenFed is no longer allowing opening new accounts Online. They want you to call in. Not sure if this is only a temporary issue. It has this msg - "Please call us at 800-247-5626 and one of our Member Service Representatives will be happy to take your application request over the phone."
Anonymous   |     |   Comment #15
Granted, paoli2, and your point is well taken.  However most comments on this site concerning EWPs, were related to cashing out CDs before their maturity date solely to take advantage of higher interests rates, should they materialize.  This is clearly an abuse of the original intent of guaranteed fixed interest rates of CDs for a fixed period of time.  I can not fault the banks and credit unions for raising the EWPs or even flat out refusing to cash out CDs before their maturity date.  They all have acceptions, especially upon death of a CD owner.
Anonymous   |     |   Comment #17
#15... I feel bad for the banks and credit unions after all I'm sure they are very worried about me......haha
paoli2   |     |   Comment #18
#17:  I would not laugh when it comes to "us" against the banks and cus.  They will always be in the driver's seat.  People who make a game of cashing in and out of CDs may not just be causing problems for themselves but for the rest of us who try to play by the rules.  The financial institutions will just make the penalties harsher (as some already have done) and will enforce the "If" line in the CD and decide they do not agree to letting us cash out before the Maturity Date.  So I suggest you think about the ramifications for all your future CDs and ours  before you  play musical chairs with CDs. 
Anonymous   |     |   Comment #16
I've broken 3 or 4 cds in the past and would do it again if it paid to do it. Don't forget the loss you take on the ewp is tax deductable.
Anonymous   |     |   Comment #19
Paoli: You talk out of both sides of you mouth.  You have posted about getting low EWP and now you critizied a poster for breaking CDs.  Make up you mine.  Or, is breaking CDs reserved only for YOU?
paoli2   |     |   Comment #25
#19  Please learn how to interpret my posts correctly.  I look for EWPs with the shortest penalties so hopefully if I really need the funds it will cost me less.  I am not in this looking for deductions on my taxes.  No one knows, not even a wise one as yourself, WHEN an emergency may happen and everyone wants to pay as little as possible IF they have to break a CD.  I made it clear there were times I HAD to cash in early but it was for emergencies I had to have the money for and I certainly was glad I had a short term EWP and not one for a YEAR!  If interest rates shoot up  ?????   Depends upon how high they go and if I have laddered my CDs well, I hope I can take advantage of the higher rates as my CDs mature.  

"What does paoli have to say about that?"    "I" am only following Ken's given information.  I want the same thing that Ken wants and that is what I try to get.  Where does Ken state we should ignore EWPs? I, however, don't recall Ken encouraging us to use the EWPs asap when the rates go up.  I thought he wants us to be aware of the best EWPs so that WHEN or IF we have to cash out early, we will pay less.

What does #24 have to say about that?   In fact if Ken is encouraging a "run on the banks" soon as rates go up, I would be very disappointed in his doing this.  Maybe Ken will clarify the issue for us so I can rest my case.  I may be misunderstanding what Ken's intentions are when he writes about EWPs.

I thought I knew what Ken means, do you, #24? 

#21   All joking aside, if this insane economy makes rates jump up fast to  4 or 5 %, it WILL be an emergency in my thinking and I will need to do early EWPs so I can bring in more income to help those I need to help.  I would be doing it for the right reason so "WHAT'S THE BIG DEAL?"   :)
Anonymous   |     |   Comment #20
paoli2 #17..... Get real.....do you really think breaking a cd in the past is why the banks and credit unions are worried about people breaking cds now..... the reason banks and credit unions are worried is because they know the rates are manipulated to these all time lows and can't go anywhere but up. They know that people with any kind of a brain that have these low rate cds are going to want to get out of them and bump up if these rates move up significantly..... paoli2, are you one of the people with a brain or are you going to honor your cd rate no matter what rates do?
paoli2   |     |   Comment #26
#20  Remember the Scarecrow in the Wizard of Oz??  Maybe I am his cousin.  "If I only had a brain"......

Just don't forget, even without brains he turned out to be pretty smart so I think I'll make the right decision when the time comes. A brain isn't much good without a "conscience". I've done quite alright by my family so far so I think I'll do what is best at the time.
Anonymous   |     |   Comment #21
I open a cd, there is an ewp, I decide that I want out of the cd for whatever reason so I pay the penalty.....what is wrong with that? If the banks or credit unions don't want you to close your cd early then they shouldn't offer an ewp.....simple, no?  Otherwise I am following their rules, I am not breaking any rules.
Anonymous   |     |   Comment #22
Paoli#13... If rates go up fast then me closing my cd for a higher rate becomes an emergency......hehehe
Anonymous   |     |   Comment #24
Isn't this website all about finding the highest RATES and lowest EWP?  Ken even compares various interest rates using EWP.  Heck, he has provided us a EWP calculator.  What does paoli have to say about that?
Anonymous   |     |   Comment #27
A brain isn't much good without a conscience? Are you serious? What does a conscience have to do with what is financially best for you and closing a cd with a manipulated rate......they manipulate the rate by buying our own bonds putting many people in trouble because of nothing they did wrong... who doesn't have the conscience? So if I have a conscience and I close a cd early that means I don't know right from wrong..... wrong is what has gotten us to these very low manipulated rates.
Anonymous   |     |   Comment #28
Paoli2, please don't feed the TROLLS.  They have no common "Cents"!  It's a "No Brainer".
Anonymous   |     |   Comment #30

On one of your posts you stated the following:  "This coming week I hope to get those CDs to replace the ones maturing.  I like them  because the ones I want only have a 6 month EWP for "just in case""

You belittle a poster for using the EWP to his/her advantage.  Isn't that what your planning on doing per your quote????

paoli2   |     |   Comment #31
#30  I am not belittleing anyone!  I state how I do things and how I feel about things.  If you don't like to read my opinions "don't" read my posts.  I am NOT cashing in CDs early.  They are MATURING.  That has nothing to do with the EWP but I always prefere shorter EWPs for the same reason KEN and many other buyers do.  Why don't you go  pick on Ken and give me a break (not where you are probably thinking of either).  I am only following what I think Ken is trying to teach us.  If this keeps up I will be changing my name to "LIZZA"  as in "DOLITTLE" since everyone seems to think I have to learn so much!  Where were you people for the past century when I was handling my family's finances all by myself and doing one heck of a good job of it?  They certainly don't consider me as being braindead.  If anyone else wants to join in this lovely little ****-tat with Lizza and all you Prof. Higgins you can find something else to do.  I'm going to the avenue to sell me apples!   Bitty-Bye!
Anonymous   |     |   Comment #32
#31,  People who handle their finances well don't need to brag about their success.  Those who think they are handling their finances well need to brag to justify their lack of success.

Changing your name to "ELIZA" would be appropriate.
paoli2   |     |   Comment #33
#31  Bravo to you for knowing the correct name of ELIZA Dolittle.  Good to know some of you appreciate such activities.  My DP caught the error days ago but I prefere "Lizza" anyway.  It's amazing that if "I" make a remark about my finances, it is called bragging but hundreds of others can share how they handle finances and it's called "sharing".  I was just trying to make a point due to the flack I tend to get in this group. So please go put on a video or something of "My Fair Lady" and have a nice evening. 
Anonymous   |     |   Comment #35
#33  You can claim you have done "one heck of a good job" of handling your finances when your family can live off the principle only without any need to invest in any CDs for your(s) remaining years.


paoli2   |     |   Comment #37
#35:  That is "your" interpretation of "doing a good job".  Mine is if one has reached their "goal" they set for themselves and in these horrendous interest rate times "still" be able to survive financially and help others without destroying themselves financially.  I think maybe "you" have a problem with the "help others" part.    Do you really think that the Donald Trumps of the world stop investing and amassing more money once they become millionaires or even billionaires?  You certainly don't seem to have the mineset of the Rich.  It's a way of life with them and your theory would put you in the trash can when the real "emergencies" hit.   You seem to be still in kindergarden when it comes to finances.    What a joke! 

BTW, our Sheryl has an interesting article about the Rich and I agree with a lot of it.  It is the way I learned to live my life and am still living it like that.  It is a very interesting article.
Anonymous   |     |   Comment #38
#37  I never stated to stop investing.  I enjoy it.  I just stated what it was like to be "Independently Wealthy".

Obviously your not!
paoli2   |     |   Comment #34
#31:  You failed the test.  You didn't correct me on her last name.  It's actually "Doolittle"  Eliza Doolittle.  Just so you keep up with your musicals.  I didn't need DP to correct that one.  Did it all by myself.
Anonymous   |     |   Comment #36
#34  I did catch the misspelling.  I didn't say anything since I didn't want to pick on the elderly.
Anonymous   |     |   Comment #39
paoli,  Did you graduate from high school?  Or possibly get a GED.  If not, you really need to get the GED.
paoli2   |     |   Comment #40
#39:  Ok, you have made your point.  YOU are not independently wealthy, and probably did not get that GED by your posting errors and your inability to have a sensible conversation with an ADULT without name calling and insinuations.  I am so well-educated that I have been able to "teach" other professionals especially in the medical field.  I do not want to have you say I am "bragging" again so we will not continue on in this vein.  I am getting bored with you and I think anyone else in this group is bored with BOTH of us.  I will now make the more sensible choice and take leave of you.  Have a good evening. 
Anonymous   |     |   Comment #41
#40  Give me a break.  Not only are you a financial genius, your also a medical wizard.  Are you posting in your dreams?
paoli2   |     |   Comment #42
#41:  Ha!  Grow Up and face the fact that some people make a success of their lives.  You would swallow your tongue if you really knew what all I have done with mine!  Don't waste my time with your negative reactions.  I don't say things I can't back up and I don't spend my posts insulting others. 

BTW, I am not posting in my dreams when I post to you.  I am posting in my NIGHTMARE!  Get a life and stay out of mine.
Anonymous   |     |   Comment #43
Paloi seems like a trouble maker. Can't we all get a long?
Anonymous   |     |   Comment #44
#43  Who says we are not getting along?   YOU are the one making the trouble making post and negative remark about Paoli.  Maybe it's not volatile enough for you and you want more trouble??