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Pentagon Federal Credit Union, better known as PenFed, offers “Money Market Certificate” terms ranging from six months to seven years. These share certificates are the credit union equivalent of the certificates of deposit (CDs) found at banks.
PenFed’s certificate rates tend to be competitive with the best CD rates from online banks and credit unions. A $1,000 minimum deposit is required to open a certificate.
Here’s an overview of PenFed Credit Union’s Money Market Certificate rates. Rates are accurate as of March 1, 2024.
| Certificate Term | APY | Minimum Deposit |
|---|---|---|
| 6 Months | 3.00% | $1,000 |
| 12 Months | 4.50% | $1,000 |
| 15 Months | 4.40% | $1,000 |
| 18 Months | 4.30% | $1,000 |
| 24 Months | 4.20% | $1,000 |
| 36 Months | 4.00% | $1,000 |
| 48 Months | 3.80% | $1,000 |
| 60 Months | 3.80% | $1,000 |
| 84 Months | 3.70% | $1,000 |
In addition to the Money Market Certificate terms and rates shown above, PenFed Credit Union also offers IRA certificates and Coverdell Education certificates.
Overview of PenFed Credit Union Certificates
PenFed Credit Union’s Money Market Certificates require a minimum opening balance of $1,000. Dividends are compounded daily and posted to the account monthly, except for six-month certificates. Six-month certificates earn dividends on a simple interest basis—this means dividends are paid only on the principal amount (not principal plus dividends) and are paid only on the date when the six-month CD matures.
If you need to pull money out of your PenFed Credit Union certificate during the term, before it reaches its maturity date, you will have to pay a penalty for early withdrawal. For six-month certificates, the early withdrawal penalty is the loss of the most recent 90 days’ dividends earned. For terms longer than six months, the early withdrawal penalty depends on how recently you opened the certificate before redeeming.
If you make an early withdrawal within 365 days from the opening date of the certificate, the penalty is the last 365 days of dividends earned. If you redeem the certificate after 365 days from the opening date, the penalty is 30% of the gross amount of dividends that would have been earned if the certificate had reached maturity.
| Overview of PenFed Credit Union Certificates | ||
|---|---|---|
| Minimum Deposit | $1,000 | |
| Term Lengths | 6, 12, 15, 18, 24, 36, 48, 60 and 84 months | |
| Compounding Schedule | Daily, except for 6-month certificates, which earn dividends on a simple interest basis | |
| Early Withdrawal Penalty |
| |
| Grace Period for Penalty-Free Withdrawals After Maturity | None (See below) | |
Notably, after maturity, there is no grace period to decide what to do with your funds, as you’ll find at many other institutions. Instead, when you open your certificate, you can choose your maturity option. Here are the options:
- Transfer your money to another PenFed account
- Roll over your money into a new certificate
- Get a mailed check
- Transfer your money via ACH
You can change this renewal selection at any time during the term before the certificate’s maturity date.
How Much Can You Earn With PenFed Credit Union’s Certificate Rates?
Before you decide to open a PenFed Credit Union Money Market Certificate, it’s important to calculate how much you can earn.
Plug the numbers into our CD calculator to figure it out:
How PenFed Credit Union’s Certificates Compare
PenFed Credit Union’s certificates are competitive with the best CD rates and are significantly higher than the national averages for CDs, according to data from the FDIC. The credit union’s $1,000 minimum deposit is less than what some of the best online banks and credit unions require.
Depending on the term and your overall goals for your savings, PenFed’s certificates could be a good choice. Just make sure you understand the rules for automatic renewal. Unlike most banks and credit unions, PenFed Credit Union has no grace period for deciding what to do with your money after the maturity date. Instead, you must select what to do with your principal and any dividends earned when you open the certificate (although changes can be made at any time before the maturity date).
Also, watch out for early withdrawal penalties. PenFed’s withdrawal penalties for longer-term certificates are somewhat steep.
As always, if you want to get the best certificate or CD rate possible, make sure to shop around. Check rates at multiple credit unions and banks so you can get the highest possible return on your savings.
About PenFed Credit Union
PenFed Credit Union was established in 1935. It has over $35 billion in assets and 2.9 million members worldwide, including in all 50 states, the District of Columbia, Puerto Rico, Guam and Okinawa, Japan.
Membership was originally limited to military and civilian government employees and their families (PenFed is short for Pentagon Federal), but now this Virginia-based credit union has an open national membership charter. Anyone who meets the geographic requirements and deposits at least $5 in a new savings account can join. PenFed Credit Union is federally insured by the National Credit Union Administration (NCUA).
Frequently Asked Questions (FAQs)
What is a share certificate?
Because they’re membership-based, credit unions use slightly different terminology than banks. Share certificates function in the same way certificates of deposits do at banks. These are a type of dividend-paying time deposit account. With traditional certificates, you get a guaranteed dividend rate if you commit to leaving your money in the certificate for a specific term.
What are the pros and cons of certificates?
Certificates are generally considered one of the safest places to put your savings. Like checking and savings accounts, certificates are protected up to a certain amount at NCUA-insured credit unions. You also get a fixed dividend rate for the length of your certificate’s term. Yet you want to be aware of the pros and cons.
Unfortunately, many major credit unions and banks have offered low returns in the Covid era’s near-zero interest rate environment. Rates on savings are starting to rise as the Federal Reserve boosts interest rates, but you may get a better return on your money by investing elsewhere. And keep in mind that certificates offer less liquidity than other deposit accounts. If you pull money out of the certificate before the term is up, you generally will have to pay an early withdrawal penalty.
Do all certificates charge an early withdrawal penalty?
No. Some banks and credit unions offer no-penalty CDs or certificates, which let you take money out of the account on a more flexible basis. But these no-penalty certificates may also pay lower dividends than a regular CD.
Are PenFed’s certificates safe?
Yes, PenFed is insured by the NCUA (charter No. 227). Its certificates are insured up to $250,000 per depositor, for each account ownership category, in the event of credit union failure.
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