PFCU CD Alert

[MJ]

Just visited their site and their 5 year CD jumped back up to 5.25% APY with a 6 month early withdrawal penalty.

I put a nice chunk of money in their 5 year 5.25% last Feb/2004.
Then they dropped the rate to either 3.50% or 3.75% APY, I believe in April.
Now it's up again. Real manic depressive org.

I am wondering if that CD rate is still a good place to park some IRA money still?

https://www.penfed.org/index.asp

MJ

 

[Bob_Smith]

Thanks MJ. I too took advantage of the 5.25% rate last spring. I'm going to put some in again. I see it is effective today until 1/26/2005.

By the way, I was able to gain access to PenFed by joining the National Military Family Association. I paid $20 last spring to join NMFA. At the time I asked PenFed if I must remain a dues paying member of NMFA in order to remain with PenFed. I don't. Once I'm a PenFed member, I remain so.

I have been happy with them - no problems encountered to date. They do require that you contact them every six months to verify your address; that's in the fine print. If you don't, they say that they will zing you with a fee. That is a strange requirement, but I handle it sending an email in January and July. That has worked fine. I suspect their military members move a lot, and they don't want to be tracking people down.

 

[Beststash]

Tempting......but I think that 5 years in today's world is a looong time. Considering the state of economy, deficits, dollar, I am a little hesitant to lock-in for 5 years. However, after reading this, I sold all of my short-term bonds in my taxable account with the goal of re-investing into some type is fixed security that is less interest-rate sensitive. Not a lot of choices unless I commit to this type of "short term" instrument. What are my other choices?? ER'd at 52, now 54 and need to supplement pension with something in this account for next 6 years.
Do anyone else see 5 years as "long" today??

 

[John Galt]

I see 5 years as a very long time in terms of my
remaining enjoyable life span. It does not concern me
in terms of investing my "forever money" though. I think I am out 25 years on some stuff. I do not expect to have to
worry about what to do at maturity.

JG

 

[Cut-Throat]

Tempting......but I think that 5 years in today's world is a looong time. Considering the state of economy, deficits, dollar, I am a little hesitant to lock-in for 5 years. However, after reading this, I sold all of my short-term bonds in my taxable account with the goal of re-investing into some type is fixed security that is less interest-rate sensitive. Not a lot of choices unless I commit to this type of "short term" instrument. What are my other choices?? ER'd at 52, now 54 and need to supplement pension with something in this account for next 6 years.
Do anyone else see 5 years as "long" today??

If there is only a 6 month early withdrawal penalty, the 'long' issue is non-existent.

The requirements for joining seem a bit odd though. Since this was supposedly 'related' to the military, I figured since I served 4 years active duty in the Navy, I would be eligible, but it looks like you have to join some right-wing organization to be admitted

 

[John Galt]

If joining a right-wing organization is required,
my qualifying should be more or less automatic.

JG

 

[MJ]

They do require that you contact them every six months to verify your address; that's in the fine print.

Thanks I know. I believe that accessing your account via the internet also works. I don't recall speaking to them for over 6 months.

I'm going to put some in again. I see it is effective today until 1/26/2005.

Unfortunately, I can't take advantage of this CD for my regular account as I nearly maxed out the 100K NCUA insurance. That's why I was asking about the rates for IRA so I might sock away some more money there.

MJ

 

[Craig]

Cut-Throat, I agree with you ... seems to me the big "risk" is that in the year I pull the cash out early (if and when we do), I've made roughly 2.125% on our cash, instead of 5.25% ... about equal to or better than most MMA's. Feels like a no lose.

Wouldn't know about it, but for the tips here. Thanks.

Craig

 

[wabmester]

Unfortunately, I can't take advantage of this CD for my regular account as I nearly maxed out the 100K NCUA insurance.

If you're married, you can get up to $400K coverage. $100K for you, $100K for the spouse, and $100K each for a joint account.

 

[JDARNELL]

It seems like this rate is pretty good compared to others even though it is for 5 years. If you didn't need the money for at least 18 months wouldn't you be better off paying the 6 month penalty (after 18 months) as compared to getting say an 18 month rate? At Ent Federal credit union this rate is 1.84%.

Of course they also have a 1-yr CD for 3.25%

JDW

 

[MJ]

If you're married, you can get up to $400K coverage. $100K for you, $100K for the spouse, and $100K each for a joint account.

Thanks but I am single. Best I can ever do is $100k personal + $100K IRA.

Can I setup a joint account for my multiple personalities? 8) :

MJ

 

[John Galt]

This is just slightly off topic, but has anyone else noticed that you can almost always beat the "best rates" at
bankrate.com with just a little bit of effort?

JG

 

[parnass]

This is just slightly off topic, but has anyone else noticed that you can almost always beat the "best rates" at
bankrate.com with just a little bit of effort?
JG

Yes, and I didn't have to look farther than calling a few local banks.

Do you know if http://bankrate.com has a financial relationship with the banks it lists? I see on their web site a form which banks can use to apply for registration. The form doesn't reveal if bankrate.com makes money from banks it lists at its web site.

 

[MJ]

Don't forget that PFCU is a credit union and Bankrates.com does not list CUs currently.

Also for the last 8 months, PFCU had a dismal rate of either 3.50 % or 3.75% for the 5 year CD.

MJ

 

[shanna]

MJ.

Actually, you can use bankrate.com to get credit union rates- it takes a little bit of extra work, but under "Savings" click on the credit union link and follow the links to find the so-called best CD rates. I noticed that PFCU was not listed..... even though it had better rates than any of the other credit unions. Interesting.

 

[MJ]

MJ.

Actually, you can use bankrate.com to get credit union rates- it takes a little bit of extra work, but under "Savings" click on the credit union link and follow the links to find the so-called best CD rates. I noticed that PFCU was not listed..... even though it had better rates than any of the other credit unions. Interesting.

Thanks. The PFCU rates just went up so maybe they haven't caught up yet, though another CU in my area offering 4.60% isn't included either and they have had this rate for many months. I guess you get what you pay for.

MJ

 

[brewer12345]

Anyone looked at the safety of PFCU? How good is NCUA insurance compared with FDIC?

 

[Cut-Throat]

I just called Penfed and was inquiring about their 5 Year CD's. I had asked the question if it was better to buy 10- $5,000 CDs instead of 1 - $50,000 CD.

If you needed $5,000 cash, you would only have to pay the Penalty on 1 $5,000 CD instead of the entire $50,000 CD.

There is a minimum invest of $1,000. Their seems to be no advantage to Purchasing 1 CD over multiple ones. I'm thinking $5,000 would be the highest I would want to go.

Anyone else have any thoughts on this?

 

[brewer12345]

CT, aside from any headaches related to account administration, sounds pretty reasonable.

BTW, I decided to satisfy my own curiosity about PFCU by looking at their latest call report. Penn Fed looks pretty healthy, makes plenty money, and if they ever converted to a bank, I'd be thrilled to be a shareholder.

 

[brewer12345]

Brewer,

Thanks for the comments!

Another Big Benefit at Penfed is that you can put your CD purchases on a Credit Card. They are treated just like a Purchase and not An Instant Cash Transaction!


After my Purchases this week, I'll get another First Class Ticket to Alaska !  (Much better than a toaster! )

Wow! Cool. I just submitted the joint application, so hopefully I will get the whole thing turned around in time to buy some 5 year paper at current rates. I wonder why they are hitting the ask right now. Perhaps part of a hedging program if rates rise? Their loan rates are very attractive, FWIW.

 

[Nords]

Too good to be true?

In March I'll need to decide whether to put a year of our two-year cash stash in a CD or an I bond.

I've already decided that a one-year CD is a loser while a five-year CD is probably worth the (low) risk of an early-withdrawal penalty.

But with PFCU pushing five-year rates like this, it makes me wonder if their crystal ball is cracked or if they're really expecting rates to rise that quickly.

I bond or a five-year CD-- is this strictly a yield decision?

 

[brewer12345]

Re: Too good to be true?

In March I'll need to decide whether to put a year of our two-year cash stash in a CD or an I bond.  

I've already decided that a one-year CD is a loser while a five-year CD is probably worth the (low) risk of an early-withdrawal penalty.

But with PFCU pushing five-year rates like this, it makes me wonder if their crystal ball is cracked or if they're really expecting rates to rise that quickly.  

I bond or a five-year CD-- is this strictly a yield decision?

I think so, as long as you can yank the money fairly painlessly in both cases. FWIW, I think that the 4 year CD (rate is 5%) is probably an even better deal than the 5 year.

 

[wabmester]

I just called Penfed and was inquiring about their 5 Year CD's. I had asked the question if it was better to buy 10- $5,000 CDs instead of 1 - $50,000 CD.

When I first opened an account with PenFed, they actually suggested this idea to me without my asking.

 

[MJ]

I just called Penfed and was inquiring about their 5 Year CD's. I had asked the question if it was better to buy 10- $5,000 CDs instead of 1 - $50,000 CD.

If you needed $5,000 cash, you would only have to pay the Penalty on 1 $5,000 CD instead of the entire $50,000 CD.

There is a minimum invest of $1,000. Their seems to be no advantage to Purchasing 1 CD over multiple ones. I'm thinking $5,000 would be the highest I would want to go.

Anyone else have any thoughts on this?

Hi CT,

When I put money in their CD's, last year at 5.25% as well, I did just that. I divided my large deposit into almost 30 CD's. it created a lot of paper work and postage (for them) which is too bad. Other financial institutions allow you to withdraw parts of a large CD without closing out the total CD.

MJ

 

[wzd]

>>Other financial institutions allow you to withdraw parts of a large CD without closing out the total CD.

Mine(Bellco) does allow this. I haven't checked with PenFed, but are you saying that they do not allow partial withdrawals?