PenFed CD reservation offer

[Sue J]

Didn't see this posted yet.

Back in 2007 we bought some of PenFeds 6% CDs. Folks here at ER.org posted about it and that's what got us to join PenFed. We bought the 3 year ones so they are maturing in a few months.

I was on the site checking on those. If you currently have a CD click the link for CERTIFICATE OPTIONS and there is a link on the right -

Promotions
Certificate Reservations
Lock in a high-yield on 5, 7 and 10 year certificates

That takes you to

I haven't gotten anything in the mail yet. Not sure if this is limited to the amount of your maturing certificates.

I've never done a CD longer than 3 or 5 years. What are your thoughts on -
5 year - 3.50%
7 year - 4.25%
10 year - 5.00%

I don't know if this is only available to those of us with CDs about to mature.

 

[calmloki]

...

5 year - 3.50%
7 year - 4.25%
10 year - 5.00%

I don't know if this is only available to those of us with CDs about to mature.

Several of us took advantage of the Penfed advance reservation for maturing certificates back in December for certs maturing in January. It was worth doing - got us about a 1/4 point extra AIR. Check the early cancellation penalties - I bought 5 year because I could cash them in close to the 2 year mark and still make better interest after paying penalty than with the 2 year certs. And if they were held longer the rate was locked in at a higher rate. Still catching the odd bit of flak about not buying 7 year instead of 3 back when the rate was 6.25%....

 

[d]

it appears that this can be funded from a "regular share account", so apparently is available even if you do not have a maturing CD. if the early withdrawal penalty is 1 year's interest (as is the 7 yr), this could be a good deal! assuming you close it early, say after 3 yrs, you'd have earned about 3.33% annually which beats any other 3 yr CD currently available. ... so it depends on what that early withdrawal penalty might be.

 

[Sue J]

I found a chart someone else made about this offer's early cancellation penalty.

From Select PenFed Members Can Reserve CDs with Yields from 3.50% to 5.00%

 

[brewer12345]

I do not think I have ever seen PF offer a 10 year certificate. At 5% that is almost double the yield you would get on an equivalent treasury. I would buy that one if I were up for renewal.

 

[brewer12345]

Hmmm, I did not see a link for certificate options. Since I do not have a CD maturing until 2014 maybe this is onl for those with imminent maturities. Can anyone confirm?

 

[sheehs1]

Don't know if this will help anyone ...but last year I was looking at the PenFed Certificates..as they had the best rate I could find. I opened a share account. I was looking at the 4% for 7 years. Things may have changed since then. Anyhoo....the bank where I had my 2 jumbo CD's that were coming due..wouldn't do anything for me UNTIL....I called them and told them I was coming to get a cashiers check. At that point, they told me they would match what PenFed was doing. Worth a try...if anyone finds it cumbersome to either add another bank. Personally I like being able to go into a branch and PenFed is too far away for me to be able to do that.

I took advantage of Wachovia's 5.35% for 5 years back in 2008....as well.

Also, I think like the rest of you here. As long as I have held it 2 to 3 years...IF rates go up....I can take the penalty and be ahead.
That IF is a big IF. Cd rates have not gone up much past 5% in what...over 10 years

I have another jumbo coimng due next year...and plan to see what PenFed is doing at that time.

 

[d]

Brewer: if you have an existing CD, even if it's not maturing, sign on, on the main menu page, right side under "I Want to ..." click on "more" to get to "other services". then under "account services" click on "Certificate Options", then you should see
Promotions / Certificate Reservation" in the upper right.

 

[dgoldenz]

That's a pretty solid offer on the 10-year.

 

[Dawg52]

Didn't credit union insurance get bumped from 100k to 250k like banks earlier this year? I may have to move more over to PF.

 

[REWahoo]

Didn't credit union insurance get bumped from 100k to 250k like banks earlier this year?

Yep.

The basic insurance amount is $250,000 per individual account holder, per federally insured credit union.

http://www.ncua.gov/resources/ShareInsurance/NCUAInsuranceFundFAQs.htm

 

[Dawg52]

Yep.

http://www.ncua.gov/resources/ShareInsurance/NCUAInsuranceFundFAQs.htm

OK, thanks. I just reserved some with new money from cd's maturing at Fidelity later this year. Good timing for me.

 

[clifp]

Thanks Sue for posting this. I have 6% CD renewing in early Oct. There is a full .5% difference between the rates in Jan and the current rates for renewing a CD. The 5 year rate is currently 3%.

Thanks to that handy chart I know that even if I treat this as 5 year CD, I still coming out almost 1% ahead a year. The only downside is my money while be earning no interest from when matures Oct to Jan.

So lets see on $25,000 that $250 a year from reading the ER forum, sweet.

 

[73ss454]

I did 100K for January for 10 years.

Pen Fed gave me a hard time and told me I could not participate because I diidn't have a CD expiring in Oct.. I didn't see any disclaimer to this fact and called back later and the next rep said the same thing to me. She put me on hold and after a while came back and said I was good to go but they are not publicly announcing it.

I don't know what that means when it's on their website. At least I'm locked in.

 

[Dawg52]

I did 100K for January for 10 years.

Pen Fed gave me a hard time and told me I could not participate because I diidn't have a CD expiring in Oct.. I didn't see any disclaimer to this fact and called back later and the next rep said the same thing to me. She put me on hold and after a while came back and said I was good to go but they are not publicly announcing it.

I don't know what that means when it's on their website. At least I'm locked in.

That is odd they gave you a hard time. I guess the customer service people were not informed. I simply reserved mine using their website and got an email confirming my reservation.

 

[clifp]

So anybody see the downside to borrowing mortgage money from Penfed at 3.875 (10 year mortgage) and than depositing it at 5%??

 

[brewer12345]

So anybody see the downside to borrowing mortgage money from Penfed at 3.875 (10 year mortgage) and than depositing it at 5%??

Probably almost no net profit after costs and taxes, but feel free.

 

[73ss454]

Closing costs?

 

[Dave J]

I have 6% CD renewing in early Oct. There is a full .5% difference between the rates in Jan and the current rates for renewing a CD. The 5 year rate is currently 3%.

.

Unless they have discontinued it, they have been giving a .25% bump on renewing CD's for a year or more.You would need to call a CSR to verify, but it would make this offer only a a .25 increase over your renewing CD.

This may or may not change how you look at it.

HTH

 

[clifp]

Ya closing cost are pretty significant. Sadly after paying of the mortgage I am taking a standard deduction.

Still if you are looking at doing a refinance. It probably makes sense to add another $100K or so and stick it into a Penfed 10 year CD. If interest rates remain the same you are making a small profit and if they do go up you you take the early withdrawal and you have additional $100K at a low interest rate.

 

[clifp]

Unless they have discontinued it, they have been giving a .25% bump on renewing CD's for a year or more.You would need to call a CSR to verify, but it would make this offer only a a .25 increase over your renewing CD.

This may or may not change how you look at it.

HTH

Interesting, I did call and they CSR quoted the same rate as were on the website.

 

[Sue J]

So anybody see the downside to borrowing mortgage money from Penfed at 3.875 (10 year mortgage) and than depositing it at 5%??

At one point in 2007 we had a PenFed car loan at 4.99% and a CD at 6%.

 

[Dave J]

Interesting, I did call and they CSR quoted the same rate as were on the website.

Did you specifically ask about the 1/4% bump on a renewing CD (if memory serves, it may have had to be 3 yr or longer), or did you just ask the rate?
I renewed in March and it was applied automatically.I had called before renewing to verify.

 

[clifp]

I had a Penfed HEL at %4.99 at the same time as the 6% CD. Sadly I didn't invest it all in the CD most was put in high quality bank stocks like BofA in 2008...

Good info to know Dave I still have 6 weeks to decide so I'll keep the renewal bonus in mind, if things change. Really this has been the most productive day reading the ER forums in quite some time

 

[two4theroad]

I did 100K for January for 10 years.

Pen Fed gave me a hard time and told me I could not participate because I diidn't have a CD expiring in Oct.. I didn't see any disclaimer to this fact and called back later and the next rep said the same thing to me. She put me on hold and after a while came back and said I was good to go but they are not publicly announcing it.

I don't know what that means when it's on their website. At least I'm locked in.

I called and they quoted the offer to me with the pertinent phrase "from an existing CD which matures in October." Since I don't have one I struck out. I mentioned that I had personal knowledge of some who did not meet that criteria so I was put on hold when she checked. Came back with the same answer......Best they would offer is the 7 yr 3.75 rate.

2fer