bank rates

How You Can Still Get 3% CDs At PenFed

PenFed logoFirst, the bad news:

Pentagon Federal Credit Union has sharply lowered most of its posted rates for new CD accounts.

This includes an eye-popping drop of more than 1 percentage point in its 5-year rate.

The good news:

Offering an unusual “loyalty” reward, the Alexandria, Va.-based credit union is continuing to make available its prior higher rates for customers renewing CDs maturing in February.

Here are PenFed’s new APYs, effective Feb. 1, for CDs with terms of 2 to 7 years, compared with those posted during December and January:

Pentagon Federal Credit Union CD Rates

CD Term Current APY Old APY
7-year 2.27% 3.04%
5-year 2.02% 3.04%
4-year 1.76% 2.22%
3-year 1.51% 2.02%
2-year 1.26% 1.41%

There are some positives amidst this carnage, however.

First, PenFed has actually raised its posted 1-year CD rate – from 0.75% to 1.16% APY.

Second, the posted 1-, 2- and 3-year CD rates exceed the highest bank CD rates for these maturities as shown on our CD Rates Leaderboard.

And, best of all, PenFed is offering a special deal for members whose CDs mature this month.

Although the deal appears nowhere on the credit union’s website, a customer service representative confirmed the following details to me:

  • Notwithstanding the new posted rates, a member renewing a maturing CD in February will be entitled to receive the higher rate posted during December and January for the renewal term he or she selects.
  • To receive the higher rate, the entire balance of the maturing CD must remain on deposit (i.e., partial withdrawals are not permitted).
  • The member may select a new maturity for the CD (e.g., change a maturing 2-year CD into a 5-year CD), but may not spread the account balance over multiple maturities (i.e., no “laddering”).
  • The offer only applies to “old money” balances, so any funds added to existing CD balances will receive the new posted rate.

In my opinion, despite the strictures, PenFed is to be commended for rewarding loyal members by allowing those unable to participate in its highly popular CD offerings during December and January to do so now by renewing their maturing CDs.

For further information about PenFed, refer to our review of the original offer.

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Comments (2)
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2 Existing Comments
  1. Gary said:
    on February 3rd at 06:25 pm

    Also the CD must already be parked at Penfed when it matures. Cannot bring over from another institution.

  2. A.Bundy said:
    on February 11th at 12:07 am

    7 years? thats a losing battle!