Pentagon Federal Credit Union is now offering 2.02% APY rate on it’s 3, 4, 5, and 7-year CDs (they call it a Money Market Certificate). The minimum opening deposit is $1,000. Early withdrawal penalties are as follows:
- For terms from 6 months to 4 years, you will lose the last 180 days of interest. If you haven’t earned 180 days of interest yet, you lose all the interest and get back only your opening amount.
- For terms of 5 years or longer, you will lose the last 365 days of interest. If you haven’t earned 365 days of interest yet, you lose all the interest and get back only your opening amount.
As a credit union, you must meet their eligibility requirements to join. Basically all members of the military and their immediate families are welcome, as well as many other military-related groups. Otherwise, simply become a member of the organization Voices for America’s Troops. Membership costs $15/yr, and you don’t need to renew to remain a PenFed member. “Voices for America’s Troops advocates for a strong national defense, including sustaining and improving quality of life programs for America’s troops, their families and survivors.”
(I ran a search through the blog archives and found a post about PenFed offering 6.25% APY 3-year CDs back in late 2006. I wonder how long until we see rates like that again?)
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Even though the rate is great, that’s a stiff early withdraw penalty…. I probably will go for the 3 or 4 years instead of 5 or longer just for the big difference in the penalty.
I used to like Penfed a lot.. their 5/5 mortgage was just hard to beat, and the 1.99% home equity loan was pretty much the cheapest fixed rate loan out there (plus the tax deduction, too).
However, they recently changed the value of their points on credit cards WITHOUT any warning. Makes on wonder if PenFed is changing its way of doing things…
Yeah the 3 years is probably the best bet unless you foresee lower rates. I probably won’t be buying any as my cash is already committed and I don’t want the lack of liquidity from the 180 day penalty.
PenFed definitely seems very aggressive in getting new members, which can be good but I agree it is important that they keep up the high customer service.
Agree with Peter wholeheartedly on the credit card points change. I was so upset about that I called and complained which I never do. Not only there was no heads up but there is not even a notification after the fact. Anyway, it was a great lesson on inflation for me.
Southwest recently did the same thing but they provided ample notice.