PenFed Ups CD Rates with Competitive Mid-Term CD Rates


Deal Summary: Most competitive are the 15-month (1.46% APY) and 3-year (1.76%); $1k minimum deposit

Availability: Easy membership requirement

Many banks and credit unions having been coming out with higher rates today (see Forum). While it is common for credit unions like PenFed Credit Union (PenFed) to change rates on the first of the month, the number of institutions increasing rates seems a little higher than normal. Perhaps the last Fed rate hike is starting to have an effect.

Today’s rate increases at PenFed aren’t impressive, but it’s nice to see any increase at PenFed during this time of the year. PenFed’s best rates tend to be offered in the Winter. I would consider PenFed’s rate increases on its 36-month CD and 15-month CD to be the most noteworthy. The APYs increased by 15 basis points on the 36-month CD (1.76%) and by 10 basis points on the 15-month CD (1.46%). Other CD rates only increased by 5 basis points. The long-term CD rates continue to be a little low relative to the top rates at internet banks.

Below is a summary of the new, noteworthy CD rates and how they have changed from last month.

  • 1.31% APY 1-year (was 1.26%)
  • 1.46% APY 15-month (was 1.36%)
  • 1.51% APY 2-year (was 1.46%)
  • 1.76% APY 3-year (was 1.61%)
  • 1.81% APY 4-year (was 1.76%)
  • 2.12% APY 5-year (was 2.07%)
  • 2.17% APY 7-year (was 2.12%)

The minimum opening deposit is $1k, with no stated balance cap. PenFed calls these Money Market Certificates, but they are essentially CDs. All of the above terms except for the 15-month are available as IRAs (Traditional, Roth, and CESA) but with rates that are 5 basis points lower.

2.22%$1k-PenFed Credit Union7 Year Money Market Certificate
2.12%$1k-PenFed Credit Union5 Year Money Market Certificate
1.87%$1k-PenFed Credit Union4 Year Money Market Certificate
1.76%$1k-PenFed Credit Union3 Year Money Market Certificate
1.61%$1k-PenFed Credit Union2 Year Money Market Certificate
1.41%$1k-PenFed Credit Union1 Year Money Market Certificate
1.41%$1k-PenFed Credit Union15 Month Money Market Certificate
Accounts mentioned in this post. Rates as of September 14, 2017.

Please refer to our PenFed's CD rates table for the full listing of CD and IRA CD rates.

Last year, PenFed’s Early Withdrawal Penalty (detailed on the Money Market Certificate Application) changed and now reads as follows:

Certificates Having a Term Greater Than Six Months:

If redeemed within the first year, all dividends will be forfeited.

If redeemed thereafter, but prior to the maturity date, the early withdrawal penalty will equal 30% of what would have been earned if the certificate had been held to maturity, not to exceed total dividends earned.


Headquartered in Alexandria, Virginia, Pentagon Federal Credit Union offers membership to virtually all U.S. residents. PenFed’s online application lists the various ways in which individuals can qualify for membership.

If you meet any of the following requirements, you are eligible to join PenFed:

1. I am in the United States Military & Uniformed Services.

2. I am an employee of a qualifying organization.

3. I belong to the following association or organization.

4. I am an employee of the United State government.

5. I am a relative or housemate of someone who is eligible.

6. I live or work at an eligible location.

7. Other

Clicking on Option #7, "Other," provides information about joining PenFed through membership in either Voices for America’s Troops ($14, one-time only dues) or the National Military Family Association ($15, one-time only dues). Joining either of these associations and PenFed can be done simultaneously using PenFed’s online application.

Need another way to join? No problem!
Members of the National Military Family Association and Voices for America's Troops
are among those eligible for PenFed membership. We've made it easy for you to join
one of these associations, which makes you eligible to join PenFed.

Joining PenFed and/or opening a Money Market Certificate can also be done in person at any of 38 branches located in the District of Columbia (6), Florida, Georgia (2), Hawaii (3), Maryland (2), North Carolina, Nebraska, New York (2), Oregon, Tennessee, Texas (4), Virginia (10), Guam (2), and Puerto Rico (2).

Credit Union Overview

PenFed Credit Union (NCUA Charter # 227) has an overall health grade of "A" at, with a Texas ratio of 2.98% (excellent), based on December 31, 2016 data. In the past year, PenFed has increased its total deposits by $1.34 billion, an excellent annual growth rate of 8.72%. Please refer to our financial overview of PenFed Credit Union for more details.

Established in 1935, PenFed Credit Union is one of the largest credit unions in the nation, with assets in excess of $21 billion.

How the Money Market Certificates Compare

When compared to the 195 similar length-of-term CDs tracked by that require a similar minimum deposit and are nationally available, there are 8 banks and credit unions that offer higher rates. Below is a sample of these:

When compared to the 143 similar length-of-term CDs tracked by that require a similar minimum deposit and are nationally available, there are 4 credit unions that offer higher rates. Below is a sample of these:

The above rates are accurate as of 4/1/2017.

To search for the best CD rates, both nationwide and state specific, please refer to the CD rates section of or our Rates Map page.

Robert | | Comment #1
Ally 11 month, no penalty CD rates seem to have gone up: 0.90%, 1.00%, 1.10% for $25K respectively
anon | | Comment #2
Unimpressive is an understatement. Yawn.
Plus, isn't PenFed's EWP one of the most severe out there?
Bogey | | Comment #3
Could be. I don't pay any attention to EWPs. With my CD ladder I never had a need or a want to cash in a CD before it's maturity date.

Good to see PenFed's CD rates are taking a step in the right direction.
LuvCD | | Comment #6
Bogey...EWP are the escape valve, if needed. Hopefully one doesn't have to trigger it but one never knows even if drawing from ira after70 1/2
Bogey | | Comment #7
Looking ahead and with proper financial planning I am never faced with EWPs for cashing any CDs before their maturity even with taking my annual RMD from my IRA accounts.
LuvCD | | Comment #8
Thus you don't look at EWP for ira accounts. Some of ensure there are none OR manageable if things go south
Att | | Comment #9
I don't look for EWPS when getting CDS. I look at the rate and term and will enter a longer term CDS if the EWPS is low in some cases. We really haven't had an interest rate environment where closing a CD early and taking the penalty is advantageous. The only time I did it was around 2010 when Penfed had a 5% 10 year CD. Many on this board did the same at Penfed. I actually closed a Penfed account and used those funds to open the 10 year CD. The penalty has some tax advantages too.
Bogey | | Comment #11
Are you contradicting your #6 comment?

What ever the case may be, I have no need to give EWPs a second thought. I ignore them. I just seek the highest interest rate for the term period I want.
Alcoholics_Anon | | Comment #4
When Connexus is offering 2% on a 3 year CD, why bother with this?
Bogey | | Comment #10
Because I am not a Connexus member and don't continue to rate chase by joining multiple CUs.
Kaight | | Comment #5
It is good PenFed rates are becoming more competitive.

Also today at PenFed, for the first time, I was able online to see all my Valor accounts. They did a rather good, professional, job of integration IMO. I like what they did.

So a double tip of the cap to PenFed today.

Oh, the Valor website? Gone with the wind.
Bozo | | Comment #12
I am still underwhelmed by PenFed's rate on the renewals of 7-year IRA CDs (2.12%). For those of us who signed up for those 3.5% 7-yr IRA CDs back in 2010, the option is roughly a 40% haircut, or a custodian-to-custodian transfer. Neither option exactly gets my juices flowing. For those looking to preserve the "no EWP for withdrawals from IRA CDs for folks over 59 1/2", the best option might be Patelco (currently 2.75% for its 5-yr). Another might be Mountain America, same rate, but no carve-out for withdrawals as with PenFed or Patelco.

The closest nationally-available 5-yr IRA CD with the "no EWP for partial withdrawals from IRA CDs for folks over 59 1/2" might well be StateFarmBank, at 2.3%. While an option, it is only marginally better then PenFed.

Why do options keep shrinking, while my waist-line keeps growing?
Bozo | | Comment #13
PS: I should note that the "no EWP for partial withdrawals from IRA CDs for folks over 59 1/2" is all about preserving the ability to do that "once per 365 days" indirect rollover in your IRA CD. I have discussed this repeatedly on the blog and the forum. In a rising-rate environment, it is just one tool in the toolbox.

Example: Many financial institutions will waive EWPs when you withdraw funds (in whole or in part) from an IRA CD for RMDs (in the year you turn 70 1/2). It is entirely different for an institution to allow you to withdraw all but the inception IRA CD balance (generally $1000) after 59 1/2 without regard to any need to fund an RMD. With regard to RMD withdrawals, it gets tricky. If, on your IRA CD withdrawal request, you check "RMD" (and seek to qualify for an EWP waiver), and seek to liquidate a $250,000 IRA CD, the financial institution might do the math. You'd need an aggregate IRA (including CDs, stocks, bonds, and alternative investments) in the neighborhood of $7 million to justify an RMD of $250,000 or so. Might raise a few eyebrows.
Bogey | | Comment #14
" You'd need an IRA in the neighborhood of $7 million to justify an RMD of $250,000 or so."

One could only dream of having to take a RMD such as that. I wouldn't care how many eyebrows it raised.
Bozo | | Comment #15
Bogey, my point was merely with the characterization of a withdrawal. If one is allowed to withdraw (without EWP) from an IRA CD at any time after 59 1/2, there is no need to justify the withdrawal at any age (much less in the year one turns 70 1/2) as an Required Minimum Distribution, or otherwise. The forms which I have seen (and executed) merely have boxes to check. If the financial institution waives EWPs for folks funding RMDs (but not otherwise), those eyebrows could make the difference between no EWP and a year or so of forfeited interest.

Again, as noted, it's all about the indirect rollover.

Example: Joe has a 5-yr IRA CD earning a rather pathetic 1.95% at Patelco. Joe want to cash in on the "new" 2.75% rate. Joe takes advantage of the "no EWP for IRA CD withdrawals for folks over 59 1/2" (which is discretionary, but does appear on page 6 of the Members' Handbook). Joe checks the box, gets his check, then re-deposits it in a new 2.75% IRA CD. This is an "indirect rollover", and one is allowed every 365 days. Example 2: Joe has an IRA CD at "XYZ" bank, which waives EWPs on withdrawals from IRA CDs only if for RMDs. Joe applies under this provision, seeking to withdraw his entire $250,000 IRA CD without EWP.

Point being, A withdrawal from any IRA account (CD or otherwise) may be utilized to satisfy an RMD. The withdrawal is never limited to "just the portion" attributable to the IRA from which the withdrawal is requested. That's the glaring loophole which allows both "no EWP for folks over 59 1/2" and "RMD" folks to utilize indirect rollovers. If, in the latter example, the financial institution believes the purported RMD withdrawal is excessive, how might it go about to prove it?

Get the drift?
XXX | | Comment #16
I'm not so sure about the "the withdrawal is never limited to just the portion attributable to the IRA from which the withdrawal is requested" statement. I think that most financial institutions have the right to limit the RMD to the specific IRA account involved. In fact, that's what I've been told by one credit union. Does anybody know if there are any statutory requirements that force financial institutions to allow RMDs without EWPs? If this is just policy, they can restrict the RMD to whatever they deem to be appropriate.
Bozo | | Comment #17
The IRS allows any RMD to be funded from any IRA, or combination of IRAs. I'd be interested to know why you think "most" financial institutions have the right to limit the RMD to the specific IRA account involved, much less the one specific credit union to which you are referring.

Herewith the magic language from the IRS:

"Can an account owner just take a RMD from one account instead of separately from each account? " Answer:"An IRA owner must calculate the RMD separately for each IRA that he or she owns, but can withdraw the total amount from one or more of the IRAs."
Bozo | | Comment #18
PS: As to whether the EWP "must" be waived on RMD withdrawals, the simple answer is "no". This has been discussed on this site, and on the web, at length.


The devil's in the details, or, more to the point, the Truth in Savings Disclosure.
Bozo | | Comment #19
PPS: One website notes as follows:

Will a bank charge an EWP on my RMD?

"For the amount of the RMD that the bank or credit union is required to send, no. However, if you have multiple IRA CDs at multiple banks, and you want to take the total required RMD from only one of the banks, the bank may charge an EWP on the withdrawal that is above their portion."

Thus, as I noted, the devil's in the details. I suspect the key is honesty. If you intend to withdraw your entire RMD from one institution, and that institution does not offer the "special deal" afforded by PenFed, StateFarmBank, or Patelco (for folks over 59 1/2), call ahead.

Stated plainly, some institutions might waive the EWP on IRA CD RMDs, no matter the amount. Others might not.

For those concerned, one way to avoid any complications would be to have enough in IRA CDs with institutions such as PenFed, StateFarmBank, or Patelco, to adequately fund RMDs for a rolling ten years or so. Accordingly, you apply for a "normal distribution" (which has no EWP, so long as over 59 1/2) and avoid the whole issue. Those rolling IRA CDs can be funded from other IRA assets.
Dave | | Comment #20
Because the IRS allows an IRA owner to cherry-pick the account(s) from where the RMDs are to be taken does not in and of itself oblige the custodian to allow RMDs in excess of those attributable to its own accounts without EWP. If that were so the institutions would be unable to annually plan for RMDs and could potentially cause instability in the financial marketplace. The EWP provides a cushion for custodian institutions to cover unexpected changes in projected RMDs.
Bozo | | Comment #21
Dave, eloquently stated. The key word is "oblige". The irony is, some may, some may not. Never over-estimate the sagacity of financial institution disclosures. Which gets back to my point: it never hurts to ask. Should you attempt to redeem your entire IRA CD and check the box "RMD", and your financial institution waives EWPs for RMDs, might it work? It's right up there with "no harm, no foul". One might suspect this topic is consistent with "how many angels can dance on the head of a pin", as I assume the number of folks potentially involved would be between zilch and five. But, it's kind of an interesting theoretical issue.

As I noted above, the key is never to get into the box. For folks over 59 1/2 at PenFed, StateFarmBank, and Patelco, (perhaps NWFCU, but I haven't checked lately), the issue of no EWP for partial withdrawals from IRA CDs is in the disclosures. RMD waivers are really a red-herring. Even as a 70-plus person, I would avoid any hassle by simply withdrawing under the "59 1/2" exception.
Bogey | | Comment #24
Correct, Dave. You are the first person that I read to point this out. Your comment #20 is a very important point and something to be seriously considered in their financial plans.
Bozo | | Comment #22
They can't limit the withdrawal, but it's a more interesting question as to whether they can charge an EWP should your withdrawal exceed the RMD for that particular institution (see below).

Example: Joe has an extremely lame IRA CD paying 1.5%. The current value is roughly $50,000. The EWP is arguably waived for RMD withdrawals. Joe's current aggregate IRA balance is over $1,500,000, so Joe's RMD (at age 70 1/2) is well within the $50,000 balance on his lame IRA CD. The EWP on the IRA CD is 365 days of interest. The RMD on Joe's IRA CD, by itself, would be roughly $1,860.

Joe's financial institution is willing to waive the EWP on the $1,860, but intends to charge Joe the 1.5% EWP (365 day EWP), on the balance, or just north of $720.

And you say?
Bozo | | Comment #23
Point being, PenFed is one of those financial institutions we over 59 1/2 love to hate While its rates are less than stellar, the option for folks over 59 1/2 with IRA CDs to make partial withdrawals is well-known.
LuvCD | | Comment #25
Client in Calif reports joint income for seniors can have adj gross income (excluding soc sec as u noted) of upward to $62k...if soc sec counted upward to 90+k . Then prop 13....not bad!
Bozo | | Comment #26
LuvCD, Inasmuch as any (new) state income tax on Social Security benefits would require a super-majority at the ballot box (per Prop 13), the odds are slim to none one could be passed. I assume just about everyone collecting OASDI would vote "no", as might their children, who could be indirectly affected. It's hardly a small issue. With the progressivity of the CA state income tax, the marginal rate can easily zoom to 9.3% for a retired couple both collecting RMDs. Should their $50,000/year combined S/S benefits be taxed at 9.3%, on the margin, one might expect pitchforks and torches (and wheelchairs) in Sacramento.
LuvCD | | Comment #27
50k joint soc not taxed in calif according to my sources....big zero
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Availability: Easy membership requirement

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  • 0.85% APY 6-month (no change)
  • 1.36% APY 1-year (no change)
  • 1.41% APY 15-month (no change)
  • 1.51% APY 2-year (no change)
  • 1.71% APY 3-year (was 1.51%)
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PenFed has, however, raised the rate on its Access America Checking account to 1.01% APY on qualifying balances between $20k and $50k; qualifying balances below $20k earn 0.50% APY.


  • Minimum $1k Direct Deposit per cycle
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  • $10 monthly service charge can...
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