PenFed CD Rates

PenFed offers money market, IRA, and Coverdell certificates with decent rates

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PenFed CD Rates

PenFed Credit Union, an open-charter credit union that anyone can join, offers a variety of financial services to its members. If you’re interested in potentially growing your cash savings at a faster rate, the money market certificates from PenFed Credit Union might be worth considering. These share certificates are similar to the certificates of deposit (CDs) available through many traditional and online banks. 

Members can open IRA certificates and Coverdell education savings certificates as well, both of which have the backing of National Credit Union Administration (NCUA) insurance. 

The APYs listed below are up to date as of the date of publication of this article. We review CD rates every two weeks and update the information below accordingly.

Money Market Certificate Overview
Certificate Term APY Minimum Deposit
6 months 2.70% $1,000
12 months 4.60% $1,000
15 months 4.65% $1,000
18 months 4.70% $1,000
2 years 4.45% $1,000
3 years 4.10% $1,000
4 years 3.90% $1,000
5 years 3.90% $1,000
7 years 3.80% $1,000
IRA Certificate Overview
Certificate Term Dividend Rates APY Minimum Deposit
1 year 4.40% 4.50% $1,000
2 years 4.26% 4.35% $1,000
3 years 3.93% 4.00% $1,000
4 years 3.78% 3.85% $1,000
5 years 3.78% 3.85% $1,000
7 years 3.68% 3.75% $1,000
Coverdell Certificate Overview
Certificate Term Dividend Rates APY Minimum Deposit
1 year 4.40% 4.50% $500
2 years 4.26% 4.35% $500
3 years 3.93% 4.00% $500
4 years 3.78% 3.85% $500
5 years 3.78% 3.85% $500
7 years 3.68% 3.75% $500

PenFed CDs: Key Features

In addition to PenFed Credit Union’s CD rates, it’s wise to evaluate the other features of its savings certificates. Of course, the potential to earn an attractive annual percentage rate (APY) on your savings matters. Yet there are other details that should influence your decision regarding whether or not to open an account as well. 

PenFed share certificates come with a $1,000 minimum deposit requirement (Coverdell education savings certificates have a $500 minimum). These requirements could be restrictive for some savers, depending on the amount of cash they have available and their savings goals. 

Like traditional CDs, the credit union’s money market certificates, IRA certificates, and education savings certificates all feature early withdrawal penalties. Depending on the terms of your account and how early you redeem your certificates, PenFed’s early withdrawal penalties may be a bit harsh. You could lose between 30% and 100% of your interest earnings if you withdraw the cash from your account before its maturity date arrives. 

Money Market Certificate Key Features
APY Range 2.70%–4.70%
Minimum Deposit $1,000
Term Range 6 months to 7 years
Early Withdrawal Penalty 6-month CDs: Loss of 90 days interest
12-month to 7-year CDs: Loss of all interest if you make an early withdrawal within the first year; after the first year, the penalty equals 30% of the total interest you would have earned if you’d held the certificate to maturity
IRA Certificate Key Features
APY Range 3.75%–4.50%
Minimum Deposit $1,000 ($10,000 to earn Premier Rates)
Term Range 1–7 years
Early Withdrawal Penalty First-year redemptions: Loss of all interest
Early redemptions after 1st year: Penalty equals 30% of total interest if certificate had been held to maturity
Coverdell Education Savings Certificate Key Features
APY Range 3.75%–4.50%
Minimum Deposit $500
Term Range 1–7 years
Early Withdrawal Penalty First-year redemptions: Loss of all interest
Early redemptions after 1st year: Penalty equals 30% of total interest if certificate had been held to maturity
Maximum Yearly Contribution $2,000

About PenFed Credit Union

Pentagon Federal Credit Union, better known as PenFed, was established in 1935. With more than 2.8 million members and nearly $37 billion in assets, the almost 90-year-old financial institution is the second-largest federal credit union in the United States. 

PenFed is a credit union rather than a bank. So, you must become a member of the financial institution before you can open a money market certificate and enjoy the other benefits of using a credit union. Some credit unions are more difficult to join than others. Yet PenFen has an open charter and, therefore, anyone can join. 

This federal credit union has a small number of branches (around 50 in total), which could be a drawback for people who prefer in-person banking. However, PenFed offers a number of other perks to its members, like competitive rates on its high-yield checking account and online savings account, along with easy options to qualify for monthly maintenance fee waivers. 

Compare Savings Account Rates

Whether you’re considering a new CD, a high-yield savings account, or something else, it’s a good idea to compare offers from several financial institutions before you open a new deposit account. 

When you research the rates and features that other credit unions and banks have to offer, you’ll be better prepared to decide if a savings certificate from PenFed Credit Union makes sense for you. Below is a look at the average interest rates on savings accounts, money market accounts, and CDs as of April 18, 2023, according to the Federal Deposit Insurance Corporation (FDIC). 

  • Savings accounts: 0.39%
  • Money market accounts: 0.57%
  • 1-Month CD: 0.24%
  • 3-Month CD: 0.78%
  • 6-Month CD: 1.03%
  • 12-Month CD: 1.54%
  • 24-Month CD: 1.43%
  • 36-Month CD: 1.34%
  • 48-Month CD: 1.29%
  • 60-Month CD: 1.37%

It’s easy to see that PenFed’s interest rates are far above the national average where CDs are concerned. Yet there are other banks that offer APYs that exceed the national average, and some of those may outperform the federal credit union as well. 

Does PenFed Charge an Early Withdrawal Fee?

If you withdraw cash from a PenFed money market certificate, IRA certificate, or Coverdell education savings certificate before its maturity date, you’ll have to pay an early withdrawal penalty. Depending on your CD’s term and how early you withdraw cash from your account, that penalty could range anywhere from 30% to 100% of your dividend earnings. 

In general, it’s best to only consider depositing your savings in a CD or a share certificate if you’re confident you can leave the money in the account until it reaches maturity. If you think you might need access to your cash on a more frequent basis, a high-yield savings account or a money market account might be a better fit for your financial needs.

How Do You Open a PenFed CD Account?

Before you can open an account with PenFed, you’ll need to become a member of the credit union. You can apply online for membership (a process that involves opening either a Regular Share savings account or a Premium Online Savings account with the credit union). PenFed will perform a soft credit inquiry to confirm your identity when you apply for membership. 

Once you’re a member of the credit union, you can apply to open one of PenFed’s savings certificates—a money market certificate, an IRA certificate, or a Coverdell education savings certificate. You can complete your application for a savings certificate online, over the phone, or in person at a branch. 

Are PenFed CD Rates Guaranteed?

PenFed’s Money Markey Certificates work the same way that CDs work. The cash you deposit in a money market certificate with PenFed features a fixed interest rate. Therefore, the credit union guarantees a fixed return on your savings, provided you leave the deposit in your account for the full term and don’t withdraw any money early.

Are PenFed CDs FDIC-Insured?

All three types of savings certificates that PedFed Credit Union offers feature the security of insurance from the National Credit Union Administration (NCUA). The NCUA is the equivalent of the Federal Deposit Insurance Corporation (FDIC) for credit unions. As a result, you can rest easier knowing the deposits you make with the credit union are federally insured for up to $250,000.

Article Sources
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  2. PenFed Credit Union. "Why PenFed IRA Certificates?"

  3. PenFed Credit Union. "Coverdell Educational Savings Certificates." 

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  7. National Credit Union Administration. "Deposits Are Safe in Federally Insured Credit Unions."