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PenFed Certificates
Old 11-30-2016, 02:44 PM   #1
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PenFed Certificates

I took out a number of Certificates in 2014 and one was a 24 month Certificate that originally matured 1/2016 and which I rolled over for another year, making 1/2017 the new maturity date.

I have reason to need to make an early withdrawal of the Certificate and read the back of the Agreement and thought I understood that there would be a 180 day interest penalty. I sent in the request for the early withdrawal and a nice lady called to confirm what my penalty would be and it was almost double what I was expecting. I read the language to her that was on the back of the original certificate and she said that they had changed the language in 2015 and increased the penalty. I informed her that they never sent any notification of language changes (they just sent a one page letter confirming the rollover, presumably under the same terms, other than interest rate and maturity date). She offered to go up the food chain and in half an hour called me back to confirm that they would honor what I understood to the the case.

Be careful (as I know you all are, to the 3rd decimal level ).

Another thing that she made me aware of is that they have a Certificate loan that they offer that does not pull credit and has a lower interest payment than the early withdrawal penalty in some cases.

I was pleased with the communication overall and though they did have a process snafu they made good on it.
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Old 11-30-2016, 06:25 PM   #2
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Well done. Thanks for the info. Good to know they are flexible.
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Old 11-30-2016, 07:58 PM   #3
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Hmmm - certificate loan!
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Old 11-30-2016, 08:17 PM   #4
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Originally Posted by Newventurer View Post

Another thing that she made me aware of is that they have a Certificate loan that they offer that does not pull credit and has a lower interest payment than the early withdrawal penalty in some cases.

I was pleased with the communication overall and though they did have a process snafu they made good on it.
Did she by chance suggest what the loan rates or terms may be when they are secured by a PenFed certificate? I might need to be asking them about this in the very near future. Hope I don't have to talk to 5 different CSRs to finally find one that knows just what the heck I'm talking about!
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Old 11-30-2016, 08:19 PM   #5
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Did she by chance suggest what the loan rates or terms may be when they are secured by a PenFed certificate? I might need to be asking them about this in the very near future. Hope I don't have to talk to 5 different CSRs to finally find one that knows just what the heck I'm talking about!
I didn't get the rates, but I will PM you her name and number
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Old 11-30-2016, 11:25 PM   #6
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Last time I checked the rates were 2% above whatever rate the securing account paid (shares or certificates) but IRA accounts are not eligible.
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Old 12-01-2016, 12:11 AM   #7
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One interesting thing for those with IRA CDs. DH had an IRA certificate there that we took out a few years ago. We knew at the time we might need to withdraw something from it and the rate was such at the time that even with the early withdrawal penalty it would be worth it. DH had multiple certificates actually so that if he needed to withdraw one he wouldn't have to withdraw the others.

Anyway, when he called to do the withdrawal and was asking about the penalty he found out that because it was an IRA certificate and I think because he was over 59 1/2, he could take a withdrawal from the certificate and would pay no penalty as long as he didn't withdraw the whole IRA. So, he ended up withdrawing all but $1000 and didn't have to pay any early withdrawal penalty.
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Old 12-01-2016, 12:54 PM   #8
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Last time I checked the rates were 2% above whatever rate the securing account paid (shares or certificates) but IRA accounts are not eligible.
Still the same (2% above).. IRA loans are precluded by the IRS. Additionally the amount of the loan can be as much as 90% of the CD purchase amount (i.e., $9,000 on a $10,000 CD). You do not have to even make payments (they will adjust the CD redemption amount). Also you can have the monthly interest credited to the CD (compounded) or sent to another account (not necessarily a PENFED account). You can change the disposition of the interest every month if you like.
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