PenFed finally had some CD rate hikes. It’s nothing to get excited about, but it’s nice to see CD rate hikes at PenFed. PenFed had some super competitive CD rates early this year, but since that time, the rates have gone way down. The most noteworthy rate hike was on PenFed’s 1-year term. The yield increased 26 basis points to 1.06% APY which makes the 1-year CD competitive as compared to top 1-year CDs at internet banks. The other new CD rates aren’t as noteworthy since you can get much higher rates at several internet banks. Below is a summary of the new September rates and how they changed from August. I’ve included the early withdrawal penalty for each term:
- 1.06% APY 1-yr (was 0.80%) EWP: up to 180 days
- 1.05% APY 2-yr (was 0.90%) EWP: up to 180 days
- 1.05% APY 3-yr (was 1.00%) EWP: up to 180 days
- 1.05% APY 4-yr (was 1.00%) EWP: up to 180 days
- 1.21% APY 5-yr and 7-yr (no change) EWP: up to 365 days
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 and a Coverdell Education Savings Account. 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 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. 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 "Other". Text will appear which informs users that "Members of the National Military Family Association and Voices for America's Troops are among those eligible for PenFed membership. We've made it easy for you to join one of these associations, which makes you eligible to join PenFed." Below the text you can 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 $13.9 billion in deposits. PenFed has an overall health grade at DepositAccounts.com of A with a Texas Ratio of 2.89% (excellent) based on June 2014 data. Please refer to our financial overview of PenFed for more details. It's federally insured by the NCUA (Charter # 227).
How The 1-year CD Rate Compares
You can get slightly higher 1-year CD rates at a couple of credit unions and internet banks, but those rates aren’t that much higher.
|Interest Rate||CD Length||Institution|
|1.15% APY (w/active chk)||12 Month CD||Melrose CU (nationally available)|
|1.10% APY||12 Month CD||ableBanking (nationally available)|
|1.06% APY||12-Month CD||PenFed (nationally available)|
The above rates are accurate as of 9/2/2014.