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PenFed's Surprising CD Rate Hike


PenFed did something unusual today. It increased the rate of its 1-year Money Market Certificate (CD) from 0.80% to 1.11% APY. PenFed rarely makes CD rate changes in the middle of the month. PenFed has raised rates during the last few days of December, but I don’t remember a rate hike this early. This rate change is nothing to get excited about, but it is a pleasant surprise after the last two rate cuts. It appears to be a small holiday special. I was told by PenFed member service that it should last through December. I wasn’t able to get any clues about January rates.

1.21%$1k-PenFed Credit Union1 Year Money Market Certificate
Accounts mentioned in this post. Rates as of October 21, 2016.

I was very disappointed with PenFed’s December CD rates. Rates were slashed to very uncompetitive levels. The highest CD rate for December is only 1.21% APY, and that’s for terms of 5 and 7 years. The 1-year CD now has the second highest rate of all of the CDs. Perhaps PenFed management felt guilty, and decided to offer something halfway decent for savers. After last December with 3.04% CDs, I’m sure members felt like PenFed had delivered a lump of coal this year.

The 1.11% APY applies to both regular CDs and IRA CDs. Minimum deposit is $1,000. The early withdrawal penalty is up to 180 days of dividends (the penalty doesn’t eat into the principal.) PenFed calls their CDs "Money Market Certificates", but they are essentially certificates of deposit (CD) with fixed rates for specific terms. Likewise, PenFed calls IRA CDs "IRA Certificates".

For more details about PenFed CDs and the early withdrawal penalty, please refer to my October PenFed CD review.

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 $15 fee) or by joining the Voices for America's Troops (one-time $14 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.

Branch Locations

Accounts can be opened online as I described above, but for those who prefer opening accounts in an office, PenFed has branches in several parts of the nation including Maryland, Virginia, Washington DC, New York, North Carolina, Hawaii, Puerto Rico and Texas.

Credit Union Overview

PenFed (NCUA Charter # 227) has an overall "A" health rating on DA, with a Texas ratio of 2.89% (excellent) based on September 30, 2014 data. In the past year, PenFed's total deposits have grown by $1.33 Billion, a growth rate of 10.58%. I’m sure last December’s CD special helped with this growth. Please refer to our financial overview of PenFed for more details.

Established in 1935, PenFed is the nation’s 3rd largest credit union, with assets in excess of $18.5 Billion and a membership of 1.3+ million members.

How the 1-Year CD Rate Compares

PenFed’s 1-year CD doesn’t have the best rate that’s nationally available, but at least it’s in the ballpark.

To search for nationwide CD rates and CD rates in your state, please refer to the best CD rates section of DepositAccounts.com.

Related Pages: CD rates, IRA rates

Related Posts

Anonymous   |     |   Comment #1
These games with rates that PenFed is playing is a joke. I've never seen so much inconsistency with ups and downs since I took my last roller coaster ride. At the next election for board members shareholders should vote these imbeciles out. For now I'm voting with my maturing Money Market Certificates by moving them to another credit union.
Anonymous   |     |   Comment #3

PenFed has been very good to me over the years and has earned a lot of interest money for me.  One of the best CUs I am  a member of.  Knowing how the Federal Reserve jerks us savers around, I don't fault  PenFed  for their up and down swings with the interest rates that they pay out.
Anonymous   |     |   Comment #5
Well #3,  I'm not loyal to the bunch in charge of PenFed who are the ones 'jerking' people around. By the way, I've been with them for 15 years so it's not a fleeting relationship.
Anonymous   |     |   Comment #10
Oh, now I see.  The Federal Reserve has nothing to do with the extremely low interest rate environment.

Anonymous   |     |   Comment #11
Not at Penfed...why is it paying up to 6% for funds to the detriment of its members?  Ethics 101
gregk (anonymous)   |     |   Comment #32
Which one?
Anonymous   |     |   Comment #36
As inscrutable one question as I have ever read here.
Anonymous   |     |   Comment #2
Penfed "has a way to go" to make up for it paying up to 6% for significant funds (over $1.5 Billion) from a bank, rather than their membership AND it needs to complement that with lower loan rates that members pay!
Anonymous   |     |   Comment #4
#2  Pls give details of what you are talking about--tnx
Anonymous   |     |   Comment #6
Look at the most recent annual report that is posted on Penfed website...look at the financials and the footnotes.  There it is...over $1.5 Billon borrowed from the Home Loan Bank with interest rates up to 6%!  The CU could raise their CD interest rates to their members, pay off the Bank loan, and have a net lower cost of money which could also be reflected in lower loan rates that members pay! 
Anonymous   |     |   Comment #7
Thanks #6. As I posted...A bunch of imbeciles running that credit union.
Anonymous   |     |   Comment #16
What are you referring to? The latest annual report which has been released is for 2013 and all it says is that 1.5$ is listed as a liability under 'borrowed' funds. That has nothing to do with any 'Home loan' bank and the idea that they paid 6% is insane. What that 1.5 number refers to is the amount of money they took in as CD's.
Anonymous   |     |   Comment #17
Under liabilities for 2013 year end...Penfed owes $13.5 B to members, not $1.5 (see note 6 to financials on page 21).  Under "Borrowed Funds" is an entry for $1.5 B which, again, in the footnote 7 (page 22) reflects who is owed it....surprise/surprise!   Federal Home Loan Bank of Atlanta. 

 People can have their opinions BUT not their own facts!  And, I agree that 6% is insane BUT that is exactly what Penfed did/pays for a "small" amount of the whole that is owed to the bank!  Glad you agree it is insane

Financial Analysis 101 class is given every other Friday...
Anonymous   |     |   Comment #23
You've misread the chart. The 6% number,actually 5.80 and 6.05, only applies to the very small amounts ,33,000 apiece, coming due in 2024. The overwhelming majority of their liabilities is at much lower rates.
Anonymous   |     |   Comment #24
Quote from earlier post "....over $1.5 Billon borrowed from the Home Loan Bank with interest rates up to 6%!"

And another post has the amount on average being paid, i.e. (as I recall) around 3.3% for the TOTAL amount of $1.5B

The facts are facts, one entity is receiving higher rates!  Over and out.
Anonymous   |     |   Comment #8
Funny as some people on this board was calling Penfed "geniuses" and now I see people complaining about a board that is offering rates that are average.   I have no loyalty.  This site was created so one could find the best rates available.  I use it as a tool for my fixed income investments.   As we have seen the leaders always change.  Ally was offering very high rates and they are now average.
Anonymous   |     |   Comment #9
Like the old saying goes:  "Money talks and B.S. walks".
Anonymous   |     |   Comment #13
And thats why they went to a reliable source HLB for funding.
They wont walk.
Anonymous   |     |   Comment #14
Isn't it great that we all have our own individual choices to make.  Everyone can be satisfied!
RJM   |     |   Comment #12
I have a penfed CD expiring on the 11th. Was not aware of the 1.11%. I just emailed them to tell them to transfer it to my share account and I would ACH it out rather than have them send a check.
I tried a few days ago to open a 2.76% 5 year CD somewhere but after spending 15 minutes applying, I realized they lowered their rate to 2.27%.
I guess I might go for the Connexus deal now. 
Anonymous   |     |   Comment #15
PenFed is a business, nothing more and nothing less. They are not your "friend" and, if they were, they'd dump many of you in a hurry. CD's are issued to raise cash, not reward members. In the world of finance a CD holder is one step above those at the very bottom of the pile...regular depositors. Truthfully, once your money is in the vault (figuratively speaking) the relationship goes stale until renewal arises. Payments, notices, etc. are automatic, impersonal and inexpensive to process. At your local bank, most CD's "automatically" renew unless you intervene within a given time period. Guess what. That's a strategy to hold on to cheap money deposited by indifferent customers. Essentially, the bank is in charge of your money because the customer is lazy. Sit on any banking rate committee and you'll see the world I speak of.

I read posts that lead me to believe people are owed something the market simply won't deliver. Welcome to finance, monetary policy and rate setting. PenFed has close to a million members. How successful is your institution and what interest rate are you offering for my next 100K CD? How about 1-year 4% FDIC insured? Come on, you owe me.     
Anonymous   |     |   Comment #18
They are a "friend" more than most know...they are a non-profit organization and owe a fiduciary duty to each and every member, i.e. loyalty is to the member, not someone or anyone else...just like a corporation but the latter duty is owed to shareholder!
MidAtlantic   |     |   Comment #21
No it is to the members, not to each individual member
soukupri   |     |   Comment #29
Loyalty is to ALL the Members as a whole. The non profit organization has to make the correct decisions or it can not exist. That includes income to run it.
Anonymous   |     |   Comment #19
Amazes me......all these comments for nothing. Don't you people have lives??  Funny.
Anonymous   |     |   Comment #20
Obviously that applies to you, since you read the comments, you are now one of that kind.
Anonymous   |     |   Comment #22
I read the articles......then glance at the comments.......amazes me how people can get excited or depressed about 1.11%. Human beings are funny animals.
Anonymous   |     |   Comment #30
Yes, you are!
Anonymous   |     |   Comment #25
Truly amazes me how easy it is to dupe human beings. Look at all these comments about 1.11%.....The government knows you people are so easily duped. They knew they would take a lot of heat when they sunk interest rates......But they are smart. They knew that if they just weathered the storm.....people would get used to really low rates....Now 1.11% and people are salavating. It's just like the cost of gasoline. Now it's $2.30 a gallon and people are all giddy when it has no business ever being over $1.00 per gallon. You people are easy marks.
Anonymous   |     |   Comment #26
However, it's not amazing that a superiority complex tends to give one such viewpoints.
Lee (anonymous)   |     |   Comment #28
How true.  In our area, there is a large national convenience store chain that for years has been raising the price of a Large Coffee.  Not a Latte' mind you, just a Large Coffee in a paper cup to go.  Now it's about $2.00.  So they recently came out with a promotion -- any size coffee -- 99 cents.  People are flocking for it.  Truth is, the coffee costs them about 6 cents a cup (I know that from my niece who is in the field) and should really be only about $1.00.  But they have everyone fooled inot thinking that a 99 cent coffee is a great deal.  Same with 1.00% CD's.  Exactly the same principal.
Anonymous   |     |   Comment #31
That 99 cent coffee may only cost them 6 cents, but the overheard costs them a lot more.

But I get your point.
Anonymous   |     |   Comment #33
The fact that Obama got re-elected is all the proof anyone needs that the collective IQ of this country is hovering around the idiot level.
Anonymous   |     |   Comment #34
Who misread the chart?
Anonymous   |     |   Comment #35
Nobody misread the chart. Your original comment failed to distinguish the minute amounts borrowed at 6%. A more skilled user of the English language in paraphrasing financial sheets would have included the interest  range of ALL the amounts borrowed. But all that pales beside the idiocy of voting for Obama in 2012.
Anonymous   |     |   Comment #37
What you are observing is intelligent people adjusting to reality. The FED is in charge of rates, not me. I'm in charge of MY MONEY and I DECIDE how to manage it. No one is being duped or misled. Furthermore, this website allows people to rate shop in the real world, something many appreciate. As an aside, you demonstrate you have no idea what a market-based economy is or isn't when you make nonsensical claims like you did about the price of gasoline.      
soukupri   |     |   Comment #27
CD's are a commodity. As long as it is FDIC insured I would choose one with the highest rate available for the timeframe you are looking for.