With December coming to a close, I’m happy to see PenFed is still offering the very high CD rates. When I first reported on these on December 1st, I was concerned that they may not last through December. As I mentioned, PenFed no longer guarantees the CD rates will last for the entire month. However, I can’t remember a time when PenFed lowered CD rates before the end of the month. In addition, PenFed still has a rotating banner on its home page advertising the 3.04% 5-year CD, and that banner says "your gift for the holidays".
There are now signs that PenFed will extend these current CD rates through January. One reader has reported being told by a PenFed representative on December 20th that the current CD rates will be extended through January 31st. I called PenFed this morning, and a representative told me that PenFed’s board of directors has not yet approved the rates for January. However, they do expect that the board will approve the current rates for January. So I would consider it likely that the rates will be extended into January, but there’s no guarantee. There has been a case when PenFed came out with lower rates in January than what had been reported. That happened in January 2010 when the board approved lower rates than what the management had proposed.
One important factor that may determine if PenFed’s current CD rates will extended into January is the demand. The rates are very competitive, and PenFed CDs have received a lot publicity on the internet. The 3.04% APY is much higher than the yields of 5-year CDs at internet banks. For example, the best 5-year bank CD rate continues to be 2.16% APY at EverBank. PenFed’s 3.04% APY is about 41% higher. If PenFed has pulled in many more deposits than they had planned, there’s less chance that the current rates will be extended into January.
A DA reader had a useful suggestion to ask DA readers how much they have invested in PenFed CDs in December. I thought this was a great idea. It can give us an idea how much in demand are PenFed CDs. So I decided to create this poll which asks how much have you put into PenFed CDs or IRA CDs in December. Also, feel free to give more details in the comments.
For more information on PenFed, its CDs and membership, please refer to my post on Four Important Points about PenFed’s CDs and IRA CDs.