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As with most credit unions, Pentagon Federal Credit Union members can tap into more attractive rates than they might find at a traditional bank. If you are looking for a place to grow your savings, PenFed’s money market certificates might be the right fit.
PenFed CD Rates for July 2024
PenFed offers certificates with relatively attractive interest rates. The offerings are broken into three different styles. Below is a closer look at PenFed CD rates for each option.
Money Market Certificates
PenFed’s money market certificates are offered in term lengths of six months to seven years. You’ll need to make a minimum deposit of $1,000 to get started. Here’s a breakdown of rates:
| Term Length | APY | Details |
|---|---|---|
| 6 months | -Minimum deposit: $1,000 -Compounding schedule: Simple interest earned -Grace period: None | |
| 12 months | -Minimum deposit: $1,000 -Compounding schedule: Daily compounding -Grace period: None | |
| 15 months | -Minimum deposit: $1,000 -Compounding schedule: Daily compounding -Grace period: None | |
| 18 months | -Minimum deposit: $1,000 -Compounding schedule: Daily compounding -Grace period: None | |
| 2 years | -Minimum deposit: $1,000 -Compounding schedule: Daily compounding -Grace period: None | |
| 3 years | -Minimum deposit: $1,000 -Compounding schedule: Daily compounding -Grace period: None | |
| 4 years | -Minimum deposit: $1,000 -Compounding schedule: Daily compounding -Grace period: None | |
| 5 years | -Minimum deposit: $1,000 -Compounding schedule: Daily compounding -Grace period: None | |
| 7 years | -Minimum deposit: $1,000 -Compounding schedule: Daily compounding -Grace period: None |
Like other CDs, you’ll encounter an early withdrawal penalty if you want access to your funds early. If you withdraw funds from a six-month CD, you’ll lose the most recent 90 days of dividends earned.
If you make an early withdrawal from a CD with a term of at least 12 months within 365 days of opening, the penalty is equal to the last 365 days of dividends earned. If you make an early withdrawal from a CD with a term of at least 12 months after 365 days of opening, the penalty is equal to 30% of the gross amount of dividends that would have been earned by the maturity date.
If you opt to have your CD automatically renewed, you won’t have a grace period to withdraw your funds. But you can choose to have the funds from your CD head to your checking account when it matures to avoid accidentally tying up your funds for another CD term.
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IRA Certificates
If you want to use certificates as a part of your retirement savings strategy, working with PenFed IRA certificates might be the right choice. You can choose to contribute to a Roth, traditional or SEP IRA to build your retirement savings. Within these accounts, you can select certificates to suit your savings goals. But you’ll need at least $1,000 to get started.
Here’s a breakdown of PenFed’s IRA certificate rates:
| Term Length | APY | Details |
|---|---|---|
| 1 year | -Minimum opening balance: $1,000 -Compounding schedule: Daily -Early withdrawal penalty: All earned dividends | |
| 2 years | -Minimum opening balance: $1,000 -Compounding schedule: Daily -Early withdrawal penalty: All earned dividends in the first year. After the first year, 30% of what would have been earned if the CD matured, up to the total dividends already earned. | |
| 3 years | -Minimum opening balance: $1,000 -Compounding schedule: Daily -Early withdrawal penalty: All earned dividends in the first year. After the first year, 30% of what would have been earned if the CD matured, up to the total dividends already earned. | |
| 4 years | -Minimum opening balance: $1,000 -Compounding schedule: Daily -Early withdrawal penalty: All earned dividends in the first year. After the first year, 30% of what would have been earned if the CD matured, up to the total dividends already earned. | |
| 5 years | -Minimum opening balance: $1,000 -Compounding schedule: Daily -Early withdrawal penalty: All earned dividends in the first year. After the first year, 30% of what would have been earned if the CD matured, up to the total dividends already earned. | |
| 7 years | -Minimum opening balance: $1,000 -Compounding schedule: Daily -Early withdrawal penalty: All earned dividends in the first year. After the first year, 30% of what would have been earned if the CD matured, up to the total dividends already earned. |
Coverdell Education Savings Certificates
The final certificate opportunity offered by PenFed is for the credit union’s Coverdell education savings certificates. If you are saving for a child’s education, this could be the low-risk solution you are searching for. You can start saving with just $500.
Here’s a breakdown of the rates available:
| Term Length | APY | Compounding Frequency |
|---|---|---|
| 1 year | Daily | |
| 2 years | Daily | |
| 3 years | Daily | |
| 4 years | Daily | |
| 5 years | Daily | |
| 7 years | Daily |
These certificates are designed to help you save for educational expenses. But if you need to withdraw funds before the maturity date, you’ll still face an early withdrawal penalty.
Advantages and Disadvantages of PenFed CDs
As with all financial products, there are some benefits and drawbacks to consider before opening a PenFed CD.
Pros
- Attractive APYs
- NCUA insured
- Online and mobile banking available
- Physical locations available
Cons
- $1,000 minimum deposit for money market certificate
- Steep early withdrawal penalties
How Much Can You Earn With PenFed CDs?
If you are considering opening a PenFed CD, it’s a good idea to see how much you would earn on your savings.
Here’s an example: You open a two-year CD with a APY and a deposit of $1,000. Over the course of two years, you will earn $85.76. But if you decide to put $1,000 into a seven-year CD, you would earn $263.70 with a APY.
How PenFed CD Rates Compare
As of July 15, 2024, the national average rate on a 12-month CD is 1.86%. In contrast, PenFed’s option offers a APY. With that, it’s undeniable that PenFed is offering reasonably competitive rates.
However, higher rates are available elsewhere. For example, Synchrony Bank is offering a APY on 12-month CDs, with no minimum deposit. First Internet Bank is offering a APY on 12-month CDs, with a minimum deposit of $1,000.
Who Should Consider Opening a PenFed CD?
Whether or not you are a current PenFed customer, the attractive CD rates make PenFed worth a second look. Unlike some credit unions, it’s very easy to join PenFed because the only membership requirement is tucking $5 into a PenFed savings account.
If you join, you’ll find competitive rates to help you grow your savings. It’s an especially good option for savers who need a CD for less than a two-year term. Beyond the 18-month mark, APYs start to drop.
Who Should Consider Other Options?
If you are looking for the very top CD rates, you might choose to take your funds elsewhere. While PenFed has competitive rates, some other financial institutions offer even better APYs. Plus, you can find CDs with a minimum deposit requirement much lower than PenFed’s $1,000 minimum.
Another reason to skip PenFed is if you are comfortable with your current banking situation. If you aren’t willing to add another financial institution to your roster, you might be able to find equally good rates wherever you currently have a checking account or tackle your other banking needs.
Anyone looking for another option should check out GOBankingRates’ rankings of the Best CD Accounts of 2024 to make sure to lock in the best deal.
Final Take
Since its founding in 1935, PenFed has grown to be the second-largest federal credit union in the U.S. with over 2.9 million members. PenFed Credit Union is open to anyone. The only requirement is that you must open a savings account and make a minimum deposit of $5 when you apply.
PenFed offers a wide range of CD options with competitive rates. The opportunity might be the right fit for some savers. But if you don’t like what you see, don’t be afraid to keep looking for the best deal for your situation.
FAQ
You have questions about PenFed CD rates. Here are answers.
- Who has the highest CD rates today?
- CD rates will vary by term length, but some of the highest three-year CD rates can be found at Popular Direct and First Internet Bank.
- What are the CD rates for PenFed Credit Union?
- As of July 1, 2024, PenFed Credit Union offers rates ranging from 3.00% to 4.00%APY.
Rates are subject to change; unless otherwise noted, rates are updated periodically. All other information on accounts is accurate as of July 1, 2024.
Editorial Note: This content is not provided by any entity covered in this article. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by any entity named in this article.
