Do you still do all of your banking at local brick-and-mortar branches?
In the past your brick-and-mortar banks may have been good enough. By searching around your area, you were probably able to find a CD with a rate comparable to internet CD rates. This is much less common in today’s interest rate environment. That is what DA reader, Elise Eliot, found out. PenFed’s 5-year CD rate was much higher than any CD rate that was locally available to her. Consequently, she decided to go with PenFed which had no nearby branches.
I know Elise is not alone. I’ve seen reports from other DA readers who have always banked locally open their first long-distance CD at PenFed. I wouldn’t be surprised if there are others considering PenFed over their local banks or credit unions. To help them, I asked Elise if she could summarize her experience opening a CD at PenFed. Elise graciously agreed to share her experience, and I’m very appreciative of her write-up. She describes the difficulties that can happen with wire transfers and opening a CD in the name of a trust. Below is her write-up:
With the economy as such and the best options for the highest paying CDs no longer within driving distance, I had little choice but to opt for a financial institution where I would have to wire, mail, or overnight the money. With none of their locations anywhere in spitting distance, I trepidatiously chose PenFed because of their presently superior rates over any other bank or credit union in the USA.
I chose to wire my money across the country, but things did not go as smoothly as I would have liked. The first two CSR’s I spoke with at PenFed were not as knowledgeable as I needed them to be, to walk me through all the procedures. But after I asked to be transferred to a supervisor, I got incredibly lucky with a woman who really knew her stuff. I very carefully wrote down all her instructions. But when I then went to my local B of A to wire the money, the CSR’s there clearly did not understand the process. On their form where it asks for the recipient of the money, as opposed to putting my name in that spot, the CSR wrote in PenFed. Wrong!
So the next day when the money should have already been received by PenFed, I instead got a call from my own B of A branch saying the transfer did not go through because "You didn’t put down a beneficiary." Huh? Since when does a wire transfer require that information? After talking in circles with a cocky, know-it-all CSR, I hung up and called B of A’s main 800 number. That CSR understood what was at issue and graciously even credited me back the $25 wiring fee. Great! I wouldn’t have made that much in interest for the days I lost anyhow, I’m sure.
But alas, things were still not settled.
When the money finally did arrive at PenFed there were more hoops to jump through. I then had to call them with instructions to now change the name on my just-opened CD to the name of my trust. They don’t have any system in place to do this initially, so it has to be done in stages.
So now it’s 2 days later…
I had heard from the PenFed CSR’s that they will backdate the interest to the date they receive the money and you state your intention to open the CD. But it wasn’t as easy as all that, and it became enough of a hassle that I let it go.
To change your CD into the name of your trust there are three pages you must either scan, mail, or fax. I chose fax. The CSR advised me to call a few hours after I faxed to make sure the papers were received. They were. Whew.
A few days later a form came in the mail that you must sign to activate your account. Fortunately, a very thorough CSR had tipped me off to ignore this first correspondence, and wait for the second communication to arrive, because that one will have the name of the trust on it. She was correct. The second form arrived a few days later.
Despite the many steps in this process of opening a long-distance CD, I feel good that I did it, and especially about the rate. I did labor over the decision about going five years vs. seven, and only time will tell if I made the right choice. In the past I’ve always opted for the longest term and never regretted it. However, this time with the rates inching up, albeit slowly, seven years seemed too long for a 3.00% rate. Five years from now though, I do hope there is a rate that will entice me to stay with PenFed. That is always much easier than moving your money around!
Even though there were complications, Elise was successful in opening the PenFed CD. She’ll now be earning much more interest than she would be earning from her local banks or credit unions.
If you’re still considering PenFed CDs, you shouldn’t wait too much longer. These top CD rates may not last after January.
For more information on PenFed and PenFed CDs, please refer to my posts, Four Important Points about PenFed’s CDs and IRA CDs, PenFed Comes Through With New Top CD Rates and Insuring Large Deposits at PenFed.