Historically, credit unions offer better interest rates than traditional banks. This remains true with PenFed Credit Union which offers some of the best certificate of deposit rates around. These rates compete well with its bank competitors.
Luckily you’ll have a variety of terms to choose from. Money Market Certificates come as nine different term lengths, from six months to seven years long. Coverdell Education Savings Certificates offer six different terms from one to seven years. These options allow you to find the accounts that work best for your financial situation and savings goals.
PenFed Money Market Certificates
The PenFed Money Market Certificates work as the credit union’s standard CDs. You have a number of term options to choose from, each with a high interest rate. This means you can see immense growth in your savings no matter which term you choose.
PenFed calculates dividends daily and pays them monthly. Whichever you choose, it can be paid by adding it back into the certificate, transferred to another account or sent in check form.
|Money Market Certificates||Minimum Deposit||APY|
PenFed Coverdell Education Savings Certificates
Coverdell Education Savings Certificates are meant to help you save for education expenses. This includes elementary, secondary and college costs like books and tuition. With a minimum deposit of $500, it’s easier to get started with these certificates than with a Money Market Certificate. There is also a $2,000 maximum yearly contribution to Coverdell Education Savings Certificates.
A big plus of these accounts is that they generate tax-free earnings. This allows you to really spend all your earnings on future education costs.
|Coverdell Education Savings Certificates||Minimum Deposit||APY|
6-Month Money Market Certificate Interest Rate Comparison
Overview of PenFed CDs
PenFed is a credit union, which means you need to be a member of the credit union in order to open an account. You can join PenFed based on your employment, volunteerism or military affiliation. You may also be able to join if you know someone who is already a PenFed member. If you qualify, then you can become a PenFed member and start earning at its high rates.
While PenFed does offer two certificate of deposit account types, you may only use a Coverdell Education Savings Certificate to pay for education expenses. Still, you can open multiple Money Market Certificates if big savings is what you’re looking for. To really maximize your savings, open a few accounts at the same time, each with a different maturity date. That way, you can have a certificate payout in six months, 12 months, two years and four years from now, for example. This practice is called a CD ladder. It helps you set up a steady stream of income over the months. Just be careful of overstretching your current funds so you don’t end up with all your money tied up in a certificate and none in your actual checking account.
Once you make your deposit into your certificate account, you won’t be able to make any withdrawals or additional deposits until it reaches maturity. If you really need to access those funds, you can make an early withdrawal although at a cost. To make an early withdrawal from a Money Market Certificate, you’ll need to first make a request in writing. Certificates funded by ACH do not allow for withdrawals within the first 60 days of account opening. For six-month accounts, you’ll have to forfeit all your earnings if the withdrawal is made within 90 days of account opening. After those 90 days, your penalty equals 90 days of interest earned. If you make an early withdrawal within the first year on an account longer than six months, you’ll have to forfeit all the dividends you earned. Any withdrawals after one year assess a penalty of 30% of what would have been earned had you held the certificate to maturity.
Coverdell Education Savings Certificates assess a slightly different early withdrawal penalty. You still must provide your early withdrawal request in writing. If you withdraw within the first year of account opening, you’ll have to forfeit all the dividends you earned. If you make a withdrawal after that first year, the penalty equals 30% of the interest your account would have earned had it been held to maturity.
Your PenFed certificates are NCUA-insured up to legal limits instead of being insured by the FDIC.
Compare PenFed to Other Competitive Offers
How Much You Earn With PenFed Certificate of Deposits Over Time
With just about the highest rates around, PenFed guarantees a big boost in your savings no matter which account you open. If you’re not saving toward education, you’ll open a Money Market Certificate, which means you have to deposit at least $1,000. This does limit potential customers who don’t have at least $1,000 to set aside responsibly. However, higher deposits result in higher final balances since there is more to grow.
To snag the highest PenFed certificate rates, you’ll want to open longer-term accounts. This can earn you hundreds, or even thousands, in savings. However, it also means that you have to wait for the long-term account to mature, which can reach as high as seven years.
Plus, PenFed compounds interest daily. This means your interest grows faster and more efficiently by building on itself every day. So your deposit will earn interest today, all that money will earn interest again tomorrow and so on. This is the fastest way to grow your deposit as opposed to compounding weekly or even monthly.
How PenFed CDs Rates Compare to Other Banks
Another credit union with excellent rates is Navy Federal Credit Union (NFCU), which offers a variety of certificates and rates. The minimum you need to deposit is also $1,000. However, larger deposits (think $100,000) can earn at higher interest rates. The rates we’ve given below correlate to the $1,000 minimum tier. Its rates compete well with PenFed’s, even reaching so high as a 0.90% APY on a 5-year account. Do note that NFCU has its own membership requirements that are more limited to military members and their families.
A close interest rate competitor, although not a credit union, is Marcus by Goldman Sachs. Marcus is an online bank which allows it to offer such high rates. You do need at least $500 to open a Marcus CD, which does open up the account to more customers than a $1,000 minimum.
|CD Account||PenFed (Money Market Certificates)||Navy Federal Credit Union||Marcus by Goldman Sachs||Chase|
Should You Get a PenFed CD Account?
If you qualify for PenFed membership, you should consider opening a certificate account. These accounts have some of the best rates around, even when compared to online banks. You’ll want to take advantage of your membership by using these great rates to really boost your savings. Plus, if you foresee education expenses in your future, the Coverdell Savings Certificates allow you to save toward those costs tax-free.