PENFED Rates Change 6%

[OAG]

Penfed has 6% APY Certificates from 3 years and up as of today 9/27/07.

[kaneohe]

Thanks for the alert.

[retire@40]

The fed cuts rates and PenFed increases their payout rates. I don't get it.

[Nords]

Quote:

Originally Posted by retire@40 The fed cuts rates and PenFed increases their payout rates. I don't get it.

We've debated this before, with Brewer postulating that PenFed is adjusting the duration of their portfolio by offering more money for longer maturities.

They jumped a whole percentage point over their old rates, and they're matching Navy Federal's (no longer available) deal of 6% APY for 10 months. NFCU's current highest rate is 5.30% APY for seven years. So maybe there's some arch-rival competitiveness in this too.

As people start having to confront rising ARM payments, I bet a lot of them will find PenFed to be an attractive source of mortgage refinancing. So perhaps PenFed is also trying to pile up the cash in anticipation of a pile-up of new customers. Even at a mortgage APY of 6.01% a non-profit can make a lot of money from the volume.

[Gearhead Jim]

A couple of months ago, Penfed eliminated the provision that members over 59 1/2 years old could take distributions from their IRA certificates, without penalty. Certificates issued before the change are grandfatherd for one withdrawl/flip.

The "no penalty" provision made the Penfed CD's a no-lose deal. If rates stay the same or go down, congratulate yourself on being so brilliant. If rates go up, just flip the certificate into one at the new higher rate.

AFAIK, no other institution offers that provision at this time. Did I miss something?

Also, I didn't check what the penalty is at Penfed for withdrawing from one of the new certificates. Is there an easy way to calculate the circumstances where it is still worthwhile to take the penalty, in return for a new higher rate?

[JohnEyles]

Cool ! I thought they normally didn't roll out the great
rates 'til January. Christmas came early this year.

But you still wanna limit your deposits there to $100K,
right (because of the FDIC insurance cap) ?

[Dogcliff]

Quote:

Originally Posted by JohnEyles Cool ! I thought they normally didn't roll out the great rates 'til January. Christmas came early this year.

Anyone believe that there may still be a killer New Years offering (6.? %)?

dc

[DRiP Guy]

Quote:

Originally Posted by Gearhead Jim I didn't check what the penalty is at Penfed for withdrawing from one of the new certificates.

I also didn't this time on the 3 yr I bought, but last time on the 1 yr. it was pretty dang near perfect -- only penalty for early withdrawal was loss of that quarter's interest, and future interest. Pretty sweet deal.

[Gearhead Jim]

Quote:

Originally Posted by Gearhead Jim A couple of months ago, Penfed eliminated the provision that members over 59 1/2 years old could take distributions from their IRA certificates, without penalty. Certificates issued before the change are grandfatherd for one withdrawl/flip. The "no penalty" provision made the Penfed CD's a no-lose deal. If rates stay the same or go down, congratulate yourself on being so brilliant. If rates go up, just flip the certificate into one at the new higher rate. AFAIK, no other institution offers that provision at this time. Did I miss something? ...

Looking at the IRA page on their website, the fine print again (or still) says that you can take withdrawls without penalty, if you are over 59 1/2. Has anyone checked to see if that's really true, or did they forget to remove that wording a few months ago?

[DRiP Guy]

Quote:

Originally Posted by retire@40 The fed cuts rates and PenFed increases their payout rates. I don't get it.

I did; bought in last night .

I also got the 6.25% last year. It is hard to beat the end of year Pen Fed offering.

[FinanceDude]

Quote:

Originally Posted by retire@40 The fed cuts rates and PenFed increases their payout rates. I don't get it.

They need money to smooth out their portfolio. They'll make a nice spread when all is said and done........

[jazz4cash]

Quote:

Originally Posted by FinanceDude They need money to smooth out their portfolio. They'll make a nice spread when all is said and done........

Gosh.....I funded my CD with leftover money from the 5.99% home equity loan Pen Fed funded in June......I was just trying to figure out what to do with these extra funds which arn't needed until two years from now (kids tuition) when the board advised me of this offer.

[calmloki]

Quote:

Originally Posted by jazz4cash Gosh.....I funded my CD with leftover money from the 5.99% home equity loan Pen Fed funded in June......I was just trying to figure out what to do with these extra funds which arn't needed until two years from now (kids tuition) when the board advised me of this offer.

Thought those were 3 year CDs? you going to take a big hit breaking them for kid's tuition in 2 years? or have the first year tuition all banked already?

[jazz4cash]

Quote:

Originally Posted by calmloki Thought those were 3 year CDs? you going to take a big hit breaking them for kid's tuition in 2 years? or have the first year tuition all banked already?

Yeah...they are 3yr. I had to rationalize the extra year. Not sure how I'll cover that.....something will come along. It seems the penalty is 6 months dividend, so it's not too harsh if I go at least 2.5 yrs, but I'm thinking more of a low rate credit card loan or 401k loan. I have 1 kid in college now and will have two in college at the same time in 2009-2011, so thats the timeframe when the double tuition hits.

[73ss454]

Not sure but if your married you can put one in DW's name, one in your name and one in both names. Can someone confirm this?

[twaddle]

You can do $400K without too much sweat: $100K each for you and spouse, and then $200K for a joint account.

National Credit Union Administration - Share Insurance

And for Jim: the break-up penalty is 6 months interest for most terms, and a full year for 7-year term.

[OAG]

About $425K there and all is NFCU Insured. My acct, her account, our account and her IRA and my IRA. 60% are at 6% or better rates, including 100% of IRA funds at 6.25%, and maturing over the next 7 years (through 2014). DW will start RMD's next year and I will start in 2011. We have been members of PFCU for over 32 years and they have almost always had the best rates on CD's, not to mention good rates on personal loans, car loans and mortgages.

[sidney]

Do you know if it is possible to buy these in a brokerage (IRA) account or do they have to be held in a Penfed account?

thanks

Sid

[MJ]

I wish I could put in a couple of 100K but alas, I am maxed out with the NCUA.
Being single with no children, the last time they had the 6% offering, I made my 3 brothers beneficiaries to increase my deposits 3 fold.

I have been trying to find CUs that would match PFCU but so far no luck.

Oh well.


MJ

[twaddle]

Yup, adding a POD beneficiary is probably the easiest way to increase your insurance level. PenFed let's you designate a beneficiary at application time, but if you want to put them in a joint account, you need to send back additional paper work.