bank rates

PenFed CD Rate Boost Attracted Big Bucks

PenFed logoThe final numbers are in, and they are staggering.

PenFed added about 30,000 new CD accounts, and deposits increased by nearly $1.4 billion, during the months the Alexandria, Va.-based credit union offered the best nationally available deals we’ve seen in quite some time.

Not surprisingly, much of that money went into CDs with terms greater than three years, according to a financial condition report filed with the National Credit Union Administration, the federal regulator that manages deposit insurance for credit unions.

If you’ll recall, Pentagon Federal Credit Union shocked us all in December by boosting 60-month CD rates to 3.04% APY. It also paid 2.22% APY on 48-month CDs, 2.02% APY on 36-month CDs and 1.41% APY on 2-year CDs – all well above what the competition offered.

That 5-year offer was the first in more than two years that paid more than 3% to any saver in the U.S.

Earlier this year, we reported that PenFed, the nation’s third-largest credit union, added more than $700 million in CD deposits in the last three months of 2013.

PenFed, of course, carried these rates through January. But we had to wait for the first financial condition report of 2014 to learn if savers’ interest carried through into the new year.

Indeed, it did.

CD deposits between 2010 and 2014

The quarterly NCUA report shows:

  • The total number of CD accounts increased by more than 9,000 between January and March (total accounts had increased by nearly 23,000 during the previous quarter when the deal was first offered).
  • The amount of money invested in CDs of 1-3 years in term length declined by $227 million from $2.6 billion to $2.4 billion (it increased by $364 million the previous quarter).
  • The amount of money invested in CDs of 3 years or longer increased by $843 million (it increased by $576 million the previous quarter).

This proves safe investments remain popular – if you offer savers a decent return. With PenFed’s offer now gone, so, too, is the incentive for most savers.

With interest rates still at rock bottom, it’s no wonder CD deposits nationwide continue to fall.

Indeed, Federal Reserve data shows the amount of money invested in certificate of deposit accounts worth $100,000 or less continues to dwindle, from a high of $1.4 trillion in December 2008 to $528 billion in April.

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  1. Debbie said:
    on April 25th at 07:04 am

    I’m one of those people that took advanage of this CD rate. We funded our 2013 Roth IRAs in December and our 2014 Roth IRAs in January. Thanks for letting people who are trying to save for retirement know about deals like this.

  2. Mike Cetera said:
    on April 25th at 08:34 am

    Debbie: That’s great to hear. We hope to find you some more great deals before the year is out.