New at PenFed - 3% 5yr certificates

[Sue J]

I just noticed the new rates on PenFed certificates (CDs). I don't know if the shorter terms have also increased rates, but I'm certain that the 3% is new.

https://www.penfed.org/Money-Market-Certificate/?WT.ac=1197

5 year and 7 year are at 3%. Early withdrawal penalties apply.

 

[samclem]

5 year and 7 year are at 3%. Early withdrawal penalties apply.

And even with their 1 year withdrawal penalty, you'd be ahead of the game compared to most other shorter-term CDs if you kept these for just two years. If interest rates climb, I'd just get out and buy something else.
Thanks for posting.

 

[Lagniappe]

Thanks for posting. Just got one with some cash that was sitting earning less than 1% in a checking account. It took all of 2 minutes.

 

[calmloki]

Thanks! My sister was talking w/ me regarding PenFed certs a month ago when they were at 2.02% and I had discussed the cost of breaking the certs. Emailed he to suggest she give up the month of interest she had earned in favor of these certs and found she was just getting ready to mail off a check for the old rate - she called and is signed up for the new rate and is happy (gotta talk to her about that whole delay of a month stuff though...)

Our 4% certs don't mature til 1/2015, with luck the rates will continue to climb.

 

[Dawg52]

Thanks for the post. I'll have to buy a small one.

 

[pb4uski]

I sent in the paperwork to have part of my IRA/FI allocation transferred from VG to PenFed just last week. Will call and followup tomorrow. I figure it should roughly keep pace with inflation for 3 years and I hope that interest rates are "normal" by then.

 

[aja8888]

Thanks!

 

[Buckeye]

We finally re-balanced after 2.5 years so we have some cash that needs a home. I talked to PenFed on Friday about opening an IRA and they gave me the good news that rates beyond 3 years were going up.

 

[Ready]

Those rates are almost double the current Ally rates. I wonder how they can do that!

 

[braumeister]

Those rates are almost double the current Ally rates. I wonder how they can do that!

Volume!

 

[calmloki]

Do note that the penalty for breaking one of those 5-7 year certificates is 365 days of interest.
So if you break the cert at the one year mark you earn 0%
if you break at the two year mark you earn an effective 1.5%
if you break at the three year mark you earn an effective 2%
if you break at the four year mark you earn an effective 2.25%
Go to maturity? 3%

Just saying. I'm in for an amount that is normally kept as fast emergency money. Stocks may make more - historically - but this is interest earning mattress money.

 

[Debinnov a]

I have a question. I have more than $250,000 (FDIC Insurance Cap) that I want to put into CD laddering and I would like to take advantage of these 2% and 3% rates. Do I need to buy the CD's at different banks due to the FDIC celing? Or do you guys not pay any attention to that? I'm going to be putting a large part of my portfolio (retiring in next few months hopefully) into fixed income. I will not need access to it, so the CD laddering works for me.

 

[REWahoo]

Deb, this FDIC website will answer all your questions: https://www.fdic.gov/edie/index.html

Remember that PenFed is a Credit Union, not under the FDIC umbrella. Rules on insured credit union accounts are found here: http://webapps.ncua.gov/ins/

 

[Debinnov a]

Thanks! Very helpful!

Deb

 

[kaneohe]

Deb, this FDIC website will answer all your questions: https://www.fdic.gov/edie/index.html

Remember that PenFed is a Credit Union, not under the FDIC umbrella. Rules on insured credit union accounts are found here: NCUA: Electronic Share Insurance Calculator (E-Calculator) – Online Version

anyone aware of any practical differences between the 2?

 

[REWahoo]

anyone aware of any practical differences between the 2?

There appears to be no real difference.

The National Credit Union Association (NCUA) is equivalent to the Federal Deposit Insurance Corporation (FDIC). The only differences are that the NCUA deals only with credit institutions and that the NCUA uses the National Credit Union Share Insurance Fund (NCUSIF), while the FDIC uses the Deposit Insurance Fund. Both insurance funds are fully backed in good faith by the U.S. Government.

NCUA-Insured Institution Definition | Investopedia

 

[Debinnov a]

Okay, so I went and purchased two 5 year CD's this am at Pen Fed. Better than sitting in savings and money market and it is earmarked for retirement anyway. Can't believe I'm this happy about a 3% return but for my risk adverse personality, it works! Now, once I sell my business, I will be laddering CD's for about $1MM so hope the rates go up even more.

So I can have up to $250,000 insured in a single account holder account, DH can have an additional $250,000 in a single account holder account and we can also have a joint account insured up to $500,000. So in essence $1,000,000 in CD's at the same bank.

Debbie

 

[ronocnikral]

Thanks for this. Going to try and break up into a bunch of $1000 and $2000 accounts so I don't take a bath on the entire thing if I need to withdrawal....

 

[frank]

I just called penfed and they said the penalty for early withdrawal was 6 months for 5 years and less and one year for above 5 years. does anyone know if this is true. I don't know if the customer service person was accurate. thanks

 

[calmloki]

I just called penfed and they said the penalty for early withdrawal was 6 months for 5 years and less and one year for above 5 years. does anyone know if this is true. I don't know if the customer service person was accurate. thanks

As i read it it's a 6 month penalty for certificates of LESS than 5 years:

Certificates with a term of 5 years or greater; (applies only to certificates issued or rolled over on 3/15/11 or later)

If redeemed within 365 days of the issue date or any renewal date, all dividends will be forfeited.

If redeemed thereafter, but before the maturity date, dividends for the most recent 365 days will be forfeited.


That's under details and disclosures.

 

[calmloki]

Ahem. Worth double checking on PenFed. Tried to buy a certificate several times online last night without success (maybe Penfed is using Amazon's cloud-based servers blended with ACA software?). Did contact a very helpful Penfed phone person who got me signed right up and took my bank routing and account numbers to fund the certificate. Today the new certificate is shown when I sign on and look at my main menu accounts. Unfortunately it is shown as a three year 2.02% certificate. 5 minutes on hold - high call volume - and phone guy Andrew is getting it sorted as I type.

Bottom line, trust but verify.

 

[brewer12345]

Ahem. Worth double checking on PenFed. Tried to buy a certificate several times online last night without success (maybe Penfed is using Amazon's cloud-based servers blended with ACA software?). Did contact a very helpful Penfed phone person who got me signed right up and took my bank routing and account numbers to fund the certificate. Today the new certificate is shown when I sign on and look at my main menu accounts. Unfortunately it is shown as a three year 2.02% certificate. 5 minutes on hold - high call volume - and phone guy Andrew is getting it sorted as I type.

Bottom line, trust but verify.

I suspect they are getting flooded with cash.

 

[Chuckanut]

Volume!

Consumer loans?

 

[Ready]

I need to do some rebalancing by selling equities and may want to go with CDs rather than putting more money into bonds. However, I would really prefer to wait until next year when my taxes are lower to incur capital gains. Does anyone have some thoughts on whether these 3% rates are likely to stick around next year, go up, down, etc?

They seem significantly higher than everyone else, so it's hard to know what to make of it right now.

 

[FIREd]

Thanks for posting this. I jumped on this offer to replace a 1.85% 3yr-CD maturing in January.