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Tips for Those With Maturing CDs at PenFed and Other Credit Unions


Do you have a CD that's about to mature at Pentagon Federal Credit Union? One of my PenFed CDs just matured last week. Back in 2006 PenFed was offering CDs with rates as high as 6.00% APY for terms as short as 3 years. The best deal was in early 2007 when PenFed was offering 6.25% APY CDs with 3-year terms. Unfortunately, I chose a 3-year term rather than the longer terms. So my CDs that I opened in September 2006 are now maturing. I'm going to miss those 6% rates.

Except for the 7-year term, PenFed's CD rates are not too competitive now, so I decided not to renew. When I opened these CDs, PenFed allowed me to specify that the funds be transferred at maturity into my PenFed shares savings account. That occurred as promised last week.

My plan to pull funds from PenFed was to initiate an ACH transfer from my Ally savings account. However, I found the following in PenFed's Regular Share Account Disclosure:
Transfers by means of ACH to other financial institutions are not permitted.

So I had to change my plans to transfer the money. Fortunately, this limitation is not listed in either PenFed's checking account or money market savings account disclosures. PenFed's Money Market Savings Account requires only $25 to open and it has no monthly fees, so I opened this account online. I funded it with money from my PenFed savings account. I then had to create a link to this account from Ally Bank.

When the CD matured and the funds were automatically transferred into my PenFed savings account, I logged in and did an internal transfer to the money market account. I then did the ACH pull from Ally Bank.

This is the same exact thing I had to do when my Navy FCU CDs matured last year. Like PenFed, Navy FCU has the same restriction on ACH withdrawals from its savings account. I didn't learn about this restriction until I noticed that my ACH transfer to my GMAC Bank account was reversed. GMAC Bank showed the money was deposited, but the next day it was transferred back to my Navy FCU account. Luckily, I wasn't charged any fees for this. Once I realized about this problem, I opened a Navy FCU money market account which is very similar to what PenFed offers. I was then able to transfer the money to my GMAC account as I described above for PenFed.

In summay, if you're planning to pull funds from a savings account by initiating an ACH transfer from another bank, make sure it's allowed by the bank or credit union.

To review my other PenFed posts, please refer to my PenFed page. They still have a 4% 7-year CD, and they continue to offer a great deal on a cash-back credit card.

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Anonymous   |     |   Comment #1
Better option: I intend to write a check on penfed mma and use edeposit plus to Alliant cu.
Anonymous   |     |   Comment #2
What a pain. Are there any reward checking accounts that have the same restrictions? The typical way to do rate hopping is via the Ally hub since the receiving reward checking bank may impose a hold for checks.
Anonymous   |     |   Comment #3
I linked my Pen Fed regular share account to my GMAC (now known as Ally) account in February 2009 when one of my Pen Fed CDs matured.

I had no problem whatsoever pulling the money out of my share account initiating the transaction from GMAC.

I just went back and verified my account statements and the transactions are right there.

I did not notice the provision in the disclosures that you refer to. I don't know if they've changed anything since then or if it's always been there.

Maybe they mean that you can't initiate outbound ACH transfers from the Pen Fed site?
Anonymous   |     |   Comment #4
There is no restriction from PenFed savings accounts withdrawals if initiated by other outside banks.
Ally is still pulling on monthly bases for the last 3 years from the savings account and I just pulled 10K out last week, and everything is going smooth.
Anonymous   |     |   Comment #5
Banking Guy,

I don't believe that you have never pulled any money from PenFed before using your saving account.
Did you leave the monthly interest paid to just stay there or how did you go about the requirement that the saving account must be used on regular bases to avoid monthly inactivity fees?
Anonymous   |     |   Comment #6
I pull money using ACH from B of A and I only have the saving account at PenFed.
No problems for the last 4 years.
ctgottapee   |     |   Comment #7
AFAIK, this restriction has always been in place. i ran into over a year ago myself. it seems it is just a limitation of their online implementation, penfed's biggest downfall. of course the poor online banking costs less and pays better rates. i'm not going to go back and read all your penfed posts, but i'm sure you mentioned this fact, or it was mentioned in one of the comments as i was expecting it over a year ago.
Anonymous   |     |   Comment #8
The ACH issue is even more complex, as some banks(CUs too?) can ACCEPT inbound ACH's *initiated at an external institution, but don't have (or don't want to) INITIATE an ACH transfer. But Bankguy's situation is a little odd...on closing accounts, especially at CUs) I try to keep a small (free) checking account and xfer the CD$ out to the checking, then if needed just write a check and deposit it locally...at today's low rates, a weeks lost interest is (tears!) pennies!

But, couldn't you use a local CU to maintain an account and then use the SHARED CU facilities and just then have one of the 2 CU's do the transaction?
M   |     |   Comment #9
How about doin' it the old-fashioned way with a check in snail mail? I've been having problems with ACH. Most of my financial institutions won't originate a push or pull EFT and the ones that will are putting huge holds on them. For example, if you initiate a pull to Chase on the 11th, Chase says that it takes them until the 16th to do it and then they have to put a hold on the funds until the 21st to finalize the transaction and make sure it clears! If I had deposited a check on the 11th, the funds would have been available on the 12! You can't initiate a funds transfer out of Chase until the money is available in your account so you have to wait until the 21st to initiate the push until the 25! So Chase ends up having my funds tied up for 14 days without interest! I am thinking about just returning to the old check is in the mail. Is there a better way to get funds moved safely and efficiently?
Anonymous   |     |   Comment #10
I'm a VERY LONG time Chase (prior Chemical Bank) customer. I have quite a bit of experience with ACH afers OUT...pulled by an external bank...and they go pretty fast. Inbound ACH's initiated by an external bank appear in general with 2-3 days. No holds either way. For me, Chase treats the funds as if a wire. But, my experience is slightly different than yours in detail. I do not know the technical details of an actual ACH transaction...it surely does depend on whether or not the external bank is a CU or not, but it sounds like Chase is playing games with YOUR money...no proof but they do have one of the best IT/SW depts. As an example, an incoming WIRE often shows online within 2 hours max 4 hours...if it's come thru the "Fed system"
Anonymous   |     |   Comment #11
I have a wamu (now chase) CD maturing this weekend and a chase checking. Can I ask chase to transfer CD money to checking by phone? I know this used to be doable but I just want to know if anyone has the up-to-date info. Thanks.
Anonymous   |     |   Comment #12
Heh Banking Guy: another great idea ... thank you! One minor improvement ... I have verified with PFCU that you can call them at least 5 business days prior to the Certificate's maturity and request the CD funds be transferred directly to their Money Market rather than the Regular Share Account which should save one step in your process. Thanks again!
Christina Goldman
Christina Goldman   |     |   Comment #13
I'm glad you made this post because one of my PenFed CD's is maturing this week. I have a money market account with them but need to check how I set the CD up (where the proceeds go when the CD matures).

Wonder when we'll ever see those 6% rates again? :(
MKA   |     |   Comment #14
I have always transferred funds out of my PenFed share savings using an ACH originated from Ally/GMAC Bank. Of course the amount has been small like a few hundred or a coupld of grand max, but never had a problem.
Anonymous   |     |   Comment #15
I just spoke with a CSR at PenFed about the ACH as posted by the Banking Guy.
I was told the following:
Depending on your prior approval of credit limit, the transfers are limited to 10K per day out of your savings account.
If you call a day or two ahead of the pull from external bank, they can increase the allowed amount as per your request.
Also, you can use PenFed ACH system for a fee to send the money out and they can adjust and accommodate your needs.
MM account or checking account is not required to do the above ACHs in or out.
Anonymous   |     |   Comment #16
I was told essentially the same thing as the poster above me.
Also, I like to ad that for a $5.00, if you call, they can send or receive any amount of ACH in or out of your share saving account and they will arrange all of the transfers for you. No other accounts are needed.
Anonymous   |     |   Comment #17
I read through all of the posts and and will say that PenFed has different standards for different customers.
Today, I just received my money from PenFed pulled from Chase ACH and the amount was $25K. No problem at all and I only have the required saving account at PenFed. Go figure!
Anonymous   |     |   Comment #18
Banking Guy, your statement:
"""Transfers by means of ACH to other financial institutions are not permitted.""",
does not apply if funds are ACHed in or out by external bank. Only problem might be the amount, but if you call PenFed they can allow out of the saving account any amount up to your current balance minus $5.00.
That's it.....
Anonymous   |     |   Comment #19
I don't think we know that PenFed has different standards for different people.

No one (including Banking Guy) has reported a failure to pull funds from a PenFed regular share account(when the pull is initiated by an outside bank), but several people have reported that they do it without problem .

I honestly think that the CSRs who are talking about a $10k limit are confusing a limit on pulls initiated by an an external bank with the limit on pulls initiated from PenFed's web site.
paoli2   |     |   Comment #20
I just found this info and would like to ask if anyone has had a problem getting any bank or credit union to send their matured CD funds to an out of town bank via a wire since we pay a charge for the wire?  It may be more expensive to do a wire transfer but at least it seems a better option than risking a check sent by snail mail for a large amount.  Thanks for any info.
Anonymous   |     |   Comment #21
In most of my experiences, wire transfers happen almost immediately; however on a few occasions, I have had problems with the receiving end mysteriously reporting "No, we have not received any wired funds yet".    A day or two later, the transaction shows up into my account.  You then have to wonder?  Did it get put in someone else's account by mistake or is it just sloppy workmanship on the receiving end putting the wired deposit on the backburner.