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PenFed CD Rates Going Down for New CDs in February


PenFed will be lowering most of its CD rates in February. This isn’t official since these rates are not yet posted on PenFed’s website. I learned of these rates from a PenFed customer service representative in a phone call this morning. Near the end of the month PenFed’s board of directors approves the CD rates for the next month. Once they’re approved, the CSRs are typically notified of these new rates by an internal email. Thanks to DA reader Lou for first reporting on this news in the forum.

One important change being made is that there will be two rate schedules. There’s one rate schedule for new CDs, and there’s one for CDs being renewed. So if you have a PenFed CD maturing in February, you’ll be able to get the 3% rates on the 5- and 7-year CDs. If you’re wanting to open a new CD with a 3% rate, you’ll have to hurry.

Below are the February CD rates that were told to me by the CSR this morning:

February 2014 rates for new CDs (unofficial):

Update 2/1/14: The PenFed rates listed below are now published at penfed.org.

  • 2.27% APY 7-year CD
  • 2.02% APY 5-year CD
  • 1.76% APY 4-year CD
  • 1.51% APY 3-year CD
  • 1.26% APY 2-year CD
  • 1.16% APY 1-year CD
  • 0.30% APY 6-month CD

February 2014 rates for renewing CDs (unofficial):

  • 3.04% APY 7-year CD
  • 3.04% APY 5-year CD
  • 2.22% APY 4-year CD
  • 2.02% APY 3-year CD
  • 1.41% APY 2-year CD
  • 1.16% APY 1-year CD
  • 0.30% APY 6-month CD

Not all CD rates are falling. The 1-year CD rate is actually going up to 1.16% APY. The current rate is only 0.75%.

I asked the CSR about the best way to apply for the CDs before February 1st to ensure that we get the January rates. The CSR recommended opening the CD by phone.

PenFed Membership

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. Our PenFed overview section has more details on PenFed’s membership qualifications.

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.

Branch Locations

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 grade at DepositAccounts.com of an A with a Texas Ratio of 3.15% (excellent) based on September 2013 data. Please refer to our financial overview of PenFed for more details. It's federally insured by the NCUA (Charter # 227).

Related Pages: CD rates, IRA rates

Related Posts

Shorebreak   |     |   Comment #1
Thanks Lou and Ken for the heads-up on the PenFed "unofficial" rates for February. I've got a certificate that matures on 2/11/14 so I'm glad there is still the option to renew at 3.04% APY.
Anonymous   |     |   Comment #2
Even though PenFed's dropping its 5 yr rate to 2.25% for new CDs, its still the best rate available, save those that are locally or regionally available.  Quite frankly, I'm really surprised that they've, at least for now, gone to a dual rate policy, especially considering how substantial the difference is between the two.
Sylvia   |     |   Comment #13
I read the dual structure as a statement of their uncommon loyalty to existing customers.  Many more target their promo rates to attract new customers or at least "new money."  I've jumped in to my share of those, only to find myself looking to relocate that money upon maturity because the rates rarely hold.

I've got a CD with another organization maturing in a few weeks.  Disappointingly, it's not with PenFed.
Shorebreak   |     |   Comment #3
As of 8:35 AM this morning, unable to access my account. This is posted on their website:

"Some of PenFed's systems are currently down for scheduled maintenance."
Shorebreak   |     |   Comment #5
PenFed website back-up at 9:05 AM but slow at times.
Anonymous   |     |   Comment #4
If the numbers are correct, and I assume they are, PenFed management must be commended for an absolutely brilliant move. They'll maintain a loyal customer base with preferred renewal rates and attract new money at competitive rates.     
Anonymous   |     |   Comment #6
They could have gotten the same results by offering a lower rate than 3%. No one else same even close to 3%.  Looks like they has a little chaos and from reading some of the posts some abuse so maybe they won't do something like this again.  I was lucky enough to be part of the 10 year 5% CD mistake that Penfed made in 2011.  At 1st I thought the 3% rate was a mistake.  I did take advantage of the 3%.  Let's see what happens to rates as the Fed tapers
gregk   |     |   Comment #7
You do understand PFCU is not a profit oriented entity, but rather owned by its members and thus run in the interest of its members (not external shareholders), - right?  No doubt there were multiple factors relevant to the 3% CD decision, but the CU's current internal performance and longer term economic projections probably had much more weight in it than considerations of what other other financial institutions are presently offering.  It might be they just determined this rate was a viable one to offer in service of their (expanding) membership, rather than some carefully calculated short-term competitive strategy with eyes on their share price (the "getting the same results by offering a lower rate than 3%" you refer to). 

Anonymous   |     |   Comment #10
#7 Other CU's have the same tax advantages as Penfed and did not offer rates at 3%.  Penfed also lends money to members and they should be offered low rates.  I have a Penfed card that I pay off each month but get 5% off on gas.  I also have CD's with Penfed.    Not saying this is the case with Penfed but when savings institutions offer much higher than prevailing rates they are having problems.  Does Penfed have an edge that the other banks and CU's do not see?  I doubt it.
Anonymous   |     |   Comment #34
Over the past years, PenFed has on occasion offered promotional rates during January.  They are not having problems.  Check out their rating and financial position on bankrate.
Anonymous   |     |   Comment #8
I would agree with #6.  That said, PenFed historically has offered from time to time instruments above the prevailing average of other top rates.  I would assume that they use a sophisticated planning program to determine their needs and what they believe, through data interpretation, what must be done to attract their projected fund requirements.
Anonymous   |     |   Comment #53
What about the other CU's.  Except for Navy they are offering CD's far above any CU.  Why are they lowering rates now?  As people have suggested before they may have had to offer higher rates as many CD's were coming due and they did not want to lose the deposits.  They could have offered 2.5% and kept the deposit as well as gotten new funds if they were looking for new capital.  They have made mistakes on rates in the past.  In 2011 they offered a 5% rate for 5 years that was quickly lowered. 
me1004   |     |   Comment #9
Dang! I was eying them for a CD at the end of the first week of February. This means that plan just went down the drain. I can't fund it before Feb. 1. 
dave9354   |     |   Comment #11
Thanks for the tip Ken! I was able to do a rollover IRA cd over the phone today before the rates change.
gregk   |     |   Comment #12
#10 did you consider the "edge" PFCU may have over banks and other CU's is that they are better run?  This always makes a huge difference among entities in the same industry, - probably more than any other element.  As for your presumption that PenFed must be having "problems" to offer such high CD rates, my above comment may indicate exactly the reverse, - but in any case have you examined their most recent published (and easily accessible) financial statements?  I've been a PenFed member for over 20 years and always monitor their financial performance very carefully.   Certain key ratios I must admit are not quite as stellar as they have been at times in the past.  However that's not to say they are in any way I can observe from the data in precarious condition, but rather still a very apparently sound institution.  Do you have objectively analyzable information to suggest otherwise? 
paoli2   |     |   Comment #14
Personally, I think Penfed is not in bad shape financially but realized they were not in shape to handle the excess number of new accounts the new 3% rate brought them.  It was obvious their new hires could not cope with customer questions or needs and they did not have enough of the other staff to take the load.  Tasks that should have been quickly handled and corrected took weeks to get handled and many, many phone calls to them.  It took them 3 weeks to correct an error on my spouse's account and they admitted it was due to all the new accounts they were trying to handle.  I just wonder if they will ever try this again in the future unless they are sure their staff is up to the task. 
Anonymous   |     |   Comment #15
 I sympathize and have had my share  of issues, which eventually were always worked out to me satisfaction.

 Better to have to make 5 calls at 3%, then 1 call at 1%, kapish?
paoli2   |     |   Comment #19
Si capisci.  My frequent calls did not seem to bother Penfed but they sure bothered certain posters on DA. My issues were finally worked out as of yesterday but not without my calling them and reminding them to do it.
Hoho   |     |   Comment #17
#12  How do you know they are better run?  Wouldn't it been smarter to offer a rate like 2.5 or  2.75?  A .5% lower rate would make a big difference They probably get all the same rate chasers that they got with 3%.  They also have a responsibility to the members who borrow money (ie: Car loans, mortgages.  They are a very open CU.  How many people who are Penfed members have any connection with the military?
Anonymous   |     |   Comment #18
#12  Guess you can't read.  I did not say they are in bad shape.  I just stated a fact when institutions offer higher rates.  I have over $200,000 with Penfed raging from 3% to 5% CD's and have done well.  I also have a charge card that gives me rebates.  I do nicely by them and will continue as long as they offer high rates.  When they don't I choose the institution that pays the highest rate and is insured
Anonymous   |     |   Comment #20
Penfed is the best.  We too have about $200K in CD's, from them, had several CD's up for renewal in Dec & January, mostly 6%ers.  No problem renewing them, and added  an IRA CDfor 2014.  How many took out ViewPoint banks 5 yr CD's five yrs ago?  I had several maturing and it took almost 3 weeks for them to get the CD to Penfed.
Anonymous   |     |   Comment #21
And the 5% off gas credit card, useable in almost any gas station in the US.  Big plus.  Also, last month I used their car buying service to get a 2 year old Accord (after the wife totalled our 2006 Accord.  I paid by check then got the 0%  financing Penfed was offering.  I didn't need the loan to buy the car, but I also like free money
Anonymous   |     |   Comment #22
It appears, by looking on the PFCU website, that the 5% back on gas is dropping to a lower percentage, as are the other % back.  You might want to check on this. Just an FYI. Also, they're going to start charging an annual fee (but CD holders don't pay it, and there are other ways to waive it).
Anonymous   |     |   Comment #25
Depends on the card.  I have a Platinum Plus that offers 5% on gas (On other items the reward is low). Look under Cash Rewards on the credit card page.  I  have CD's with them so no fees.  I check every month to see if things change.  I only use the card for gas.  The reward is earned on each statement which is nice.  If they chnge the terms they have to inform you.
Anonymous   |     |   Comment #23
On a different topic about Penfed, they are currently running a promotion for their credit cards.  If you PAY A BILL online (one time or recurring) you will be credited with $10 to you credit card account up to three times.  So if you pay three bills between now and March you will receive a $10 credit each of those three times for a total of $30.  I did not read this promotion very carefully when I received the email about it, so I was surprised to see my credit card account credited with $10 this morning.  I called and they gave me the details that I should have noticed in the email they sent to me.  (This must be a payment of a bill and NOT just a purchase.)  So if any of you use your Penfed credit card to pay bills online over the next couple of months, you can expect to see $10 credits up to three
Anonymous   |     |   Comment #24
thanks for the information, one other note with this, it must be a penfed "Visa" card. 
Anonymous   |     |   Comment #28
The savings rates will stay low as far as we can see because of the federal debt and deficits.
Imagine giving COLA to SS beneficiary of 5%, it is not going to happen in our life time.
Bernanke inclined in may speeches that 3% is the upper limit on 10 year treasuries.
hoho   |     |   Comment #32
Now that their rates are at a reasonable level things for Penfed and DA will go back to normal.
DCGuy   |     |   Comment #33
Thanks very much for this update on February rates.  I just opened a 3 year CD rate to lock in the January rate.
Anonymous   |     |   Comment #35
This site site appears to be like communist China, posts are censored for no violation reasons.
Anonymous   |     |   Comment #38
Stick to the subject matter and they won't be censored.  Besides, China, communist or not, is becoming the worlds next "Super Power" surpassing the United States.
gregk   |     |   Comment #39
#28 You seem to believe the Fed can control interest rates under all circumstances, but this isn't true, - the market determines rates.  If inflation should begin rising significantly (or even be expected to) interest rates will follow, regardless of Fed actions.  Bond investors aren't likely to accept negative real rates of return very long.  The Fed has been ennabled to suppress rates over the last half decade because of stagnant economic activity and muted CPI numbers, not due to some command structural control over the economy.   
gregk   |     |   Comment #40
#18 The problem lies with your writing rather than my reading. You stated a (categorical) "fact" - "when savings institutions offer much higher than prevailing rates they are having problems", and then contradicted the assertion with "not saying this is the case with Penfed", - in which case it's not a categorical fact but a qualified or conditional one, that you might have communicated by stating "when savings institutions offer much higher than prevailing rates they are SOMETIMES (or OFTEN) having problems" - and then gone on to elucidate what those problems could be, and why PenFed would offer so much higher than prevailing rates despite not having such problems.

Now's your chance.
gregk   |     |   Comment #41
#17 I assume Penfed is "better run" (and I should add, - better serves its members) because of the following:

1) CD rates typically among the highest in the industry (and often the very highest)

2) Loan rates typically among the lowest in the industry (and often the very lowest)

3) A consistently strong balance sheet

No doubt the efficiencies and economies of scale PenFed's huge asset base allows contributes to this state of affairs, - but more foundationally  the strategies and policies management provides to effectively build and exploit such advantages.  PenFed seems to have been highly successful in this regard for a long period.  We'll have to see if their superior performance is maintained.
lou   |     |   Comment #42
If you look at Penfed's financials, you would be amazed how many deposits they have where they pay little or no interest. I can't remember right now but the average rate they pay on all their deposits is much lower than the 3% everyone is talking about on this website.
gregk   |     |   Comment #44
A very meaningful observation, I believe. If you have many thousands (even tens of thousands) of checking accounts with an average daily balance of say several thousand dollars at pretty close to 0% interest, it provides a significant margin for Penfed even when they invest those funds for what seems a paltry rate themselves. 
Anonymous   |     |   Comment #43
PenFed bought money at 3% plus expenses. How they sell that money will determine their profit. Brokered CD's have been at 3.3% (no compounding) for some time so the two-month 3% special rate is/was not unique to PenFed.

Go Navy!
paoli2   |     |   Comment #45
Frankly, I think Penfed gave us those great 3% CD rates hoping to bring in some new customers for car loans.  No matter what I called about, I was always asked if I was interested in a new car loan.  They also advertised them on their webpage.  It would be interesting to know if they did get any new loans out of this deal.
Anonymous   |     |   Comment #46
I can't believe how your reports of interactions with PenFed are so completely opposite from mine. I had to call them 6 or 8 times this month due to some complex trust and IRA rollover issues (all completed flawlessly.) Never ONCE did a rep try to sell me anything. Are you sure you don't work for a rival financial institution?
paoli2   |     |   Comment #49
#46  I didn't say they were pushy about it or obnoxious. I just think they are trained to just ask if we were interested.  If you go to their webpage the first thing on it is a photo of a car and their ad for their car loans.  That is a part of what they do as a credit union.  Why shouldn't they find out if we want a car loan?  BTW, I no longer am a part of the work force so I resent your insinuation about the "rival" financial institution.  What is so wrong with my assumption that they hoped to get some new car loan business by bringing in more customers with the 3% CD rate?  I think that is what a good business should do.  Find ways to bring in more customers. 
Anonymous   |     |   Comment #63
They pitch the car loan if your credit is excellent.  Otherwise, they don't bother.  The CSRs see the offers on your profile screen.
Anonymous   |     |   Comment #51
To get s 3% Brokered CD you have to open a 10 year CD. These 5 yr. rates are unique.
Goo   |     |   Comment #56
I disagree that the PenFed 3% 5-year rate was not special.  You could not find anything close to that.  The 3.3% brokered CD's you refer to were 10 year CD's, not 5 years.  Otherwise, can you show us specifically where you can get a 3.3% 5 year brokered CD?  Thanks
Anonymous   |     |   Comment #47
I see the new posted rates, but I'm wondering if anyone has found info about the alleged higher rates for renewed CDs?  I have some maturing CDs at PenFed in February, but I can't see that there is any higher (2nd tier) rate for these.  Thanks!
Anonymous   |     |   Comment #52
That (2nd tier) rate was unofficial.  I will find out soon.  One of my PenFed CDs matures today, Feb 2, and I had it set to automatically renew.  I hope we do get the higher rate, but when rates change there has to be a cut off somewhere and I will accept what I get without whining about it like a poster in another thread.
CC in CA
CC in CA   |     |   Comment #55
Thanks, #52.  I'm hoping the renewal rate is correct.  That would be NICE!  :-)  Please post when/if you find out.  Thanks!
gregk   |     |   Comment #48
#43 PenFed is not a profit oriented enterprise beholden to external shareholders.  You might not believe it, but that makes a difference in how they operate.  The equation is not quite like you state.
Anonymous   |     |   Comment #50
The equation is exactly as stated. PenFed must profit or go out of business. They purchased long-term capital at higher than average rates and now they must find buyers of that money at an even higher rate. The difference between the two rates is called the spread and it's a very important number.  Members have share accounts and, as such, are the shareholders.
gregk   |     |   Comment #54
PenFed must cover its expenses and capital investment requirements as a going concern over the unfolding years of its operations utilizing the "spread" between deposit and loan rates you refer to to do so.  But its silly to believe the specific funds flowing into Penfed now from its 5&7 year 3% CD offer must now immediately be lent out at an even higher rate to obtain this necessary spread.  You don't seem to grasp the long term process involved in this game that encompasses both previous and future fund inflows and outflows  and the rate changes that occur on both sides over time.  I'm not going to elaborate on how this process works because it should be intuitive, but only repeat that the "spread" is significant only as a long-term phenomenon.  There's no direct relationship between PenFed's current 3% CD's and its current loan rates.
Anonymous   |     |   Comment #57
I said nothing about immediacy and twenty five years of investment banking experience taught me the overall simplicity of the game. No one buys money at 3% when they could just as easily have purchased it at 2.75% unless they have a purpose (real, imaginary or otherwise). I remember countless monthly rate setting meetings that were not only highly contentious but, in hindsight, laughable.

If you know why PenFed paid a premium I'm all ears.  
paoli2   |     |   Comment #58
Have any of you ever heard of Black Friday where stores sell things at insane prices just to get tons of people to show up to buy them?  They lose money on those items but make it up when the same people grab a lot of other items they may "not" have bought. Years ago, the homesteads would give us toasters etc. just to get us to open that big CD.  I have a stuffed rabbit I still have sitting in my chair.  We call it our 10M rabbit.  They got me to buy that CD just so I could get my beautiful rabbit!  Crazy??  No.  Businesses do it all the time to get customers.  I still stand by my post stating I think this was Penfed's way to try to sell more loans.  Maybe I'll call them "one more time" and just ask!
gregk   |     |   Comment #59
Speaking only for myself, I wouldn't have "bit" on a 5 year CD from PenFed at less than 3%, - so it wouldn't have been "just as easy" for them at 2.75%, at least with my money.

Consider this.  I'm a member of the largest CU in the state I reside in, who frequently over the years has made non-contractual payments to its members at year-end based on the success of the CU (very similar to cash dividends paid to shareholders).  Why would they do this when they don't have to?  From the way you talk it's simply inexplicable, - but may simply be a decision to allow its owners to share in the success of the business.

Could PenFed's 3% CD offer be a result of some similar motive, rather than the "maximum profit" orientation you seem to believe is the only intelligible one for them?

I think their decision likely involved multiple calculations, including a plausible expectation that interest rates will rise significantly over the coming years, and so to lock up money now at 3% over 5 or 7 years will prove viable over that long term in service to those members who choose it that have felt starved by the otherwise poor options. 

They've often over the years offered significantly higher CD rates than other CU's, and seem to achieve excellent financial performance notwithstanding.      
paoli2   |     |   Comment #60
#59  I think you may have solved the "mystery".  I was burnt out with 2% anything CDs and it was something about the 3% that put the light in my eyes.  Kind of like stores selling things for $99.99 instead of $100.  It's a psychological thing with numbers and it has worked for eons with customers. I think you may have saved me that phone call because your theory makes the most "cents" :)  Thanks!
Anonymous   |     |   Comment #61
If rates next year go to say  4% then the 3% CD will look like a bad move.  No one knows what will happen with rates (Not even Penfed).   Guess we would have to see if people would close the CD and take the EWP.  We'll have to look at the blog a year from now.  In the event  (Unlikely) that Penfed failed you would not get the 3% rate.
Anonymous   |     |   Comment #62
If, if, if!  If World War III were to break out tomorrow, none of this blog would be of any relevance.  Or another successful terrorist attack like 9/11 for that matter.
Anonymous   |     |   Comment #64
OK, it's official.

My PenFed CD which matured on Feb. 2, was renewed at the higher January interest rate.  Thanks for the heads up, Ken.  And I didn't even call PenFed to inquire about it.
Anonymous   |     |   Comment #65
When does this special renewal rate expire with Penfed?
Anonymous   |     |   Comment #66
I also had a certificate which matured on Feb 3, I changed the term to 7 yr and it renewed at 3.04 APY. I didn't have to call, either.
penfedcustomer   |     |   Comment #67
I called about March and they are lowering the rates and this customer rep said existing money was not getting 3.00%. Please reconfirm. The new March rate for 5 years is 1.75%