Pentagon Federal Credit Union (PenFed) offers three types of certificates with varying terms and deposit requirements. While many of its yields are competitive, you might be able to find slightly higher rates at online banks. PenFed is one of the easiest credit unions to join — all you need to do is open a savings account with a minimum $5 deposit.
Account details and annual percentage yields (APYs) are accurate as of June 20, 2024.
About PenFed Credit Union certificates
Instead of having certificates of deposit (CDs) that accrue interest, credit unions offer “certificates” that accrue dividends. It’s slightly different terminology, but it works the same way.
For most PenFed certificate terms, dividends compound daily and credit to your account monthly. But six-month certificates work differently and only earn simple interest based on your deposit amount.
In general, PenFed’s certificate rates are attractive — but may be lower than the best credit union CD rates.
Overview of PenFed Credit Union certificates
PenFed offers the following types of certificates:
- Money Market Certificates are high-yield certificates with terms ranging between six months and seven years. It requires a $1,000 minimum deposit to open.
- IRA Certificates are a tax-advantaged retirement savings vehicle. It has terms ranging between one and seven years and requires a $1,000 deposit to open. You can open a Traditional, Roth or SEP IRA Certificate.
- Coverdell Education Savings Certificates are a tax-advantage tool for education savings; you can save up to $2,000 per year toward your family’s future education costs. Yields on one- to seven-year terms are competitive and you only need $500 to open an account.
Unlike most banks, PenFed doesn’t have grace periods for its certificates. This is the short window of time where you can cash out your CD without paying an early withdrawal penalty. Instead, you choose whether you want your CD to auto-renew or not when you open the account (This allows for fewer surprises, but also less flexibility should your savings priorities change over the term of the certificate).
You can change your renewal selection at any time. But if auto-renew is turned on at maturity, your certificate will start another term the same day it matures. You won’t have the option to cash it out without penalty. If auto-renew is turned off, you can transfer your money to your bank account.
| OVERVIEW OF PENFED’S MONEY MARKET CERTIFICATES | |
|---|---|
Minimum deposit | $1,000 |
Term lengths | 6, 12, 15, 18, 24, 36, 48, 60 and 84 months |
Compounding schedule | Daily |
Early Withdrawal Penalty | Terms of 6 months: Up to 90 days’ dividends. Term lengths greater than 6 months: Up to 30% of the dividends you would’ve earned at maturity |
Grace Period for Penalty-Free Withdrawals After Maturity | None |
How much can you earn with PenFed Credit Union certificates
Here is how much you could earn in interest on a PenFed Money Market Certificate, assuming a $10,000 deposit.
| Money Market Certificate Term | APY | Total earnings |
|---|---|---|
| 6 months | 3.00%* | $150.00 |
| 12 months | 4.00% | $399.76 |
| 15 months | 4.00% | $502.18 |
| 18 months | 4.00% | $536.54 |
| 2 years | 4.00% | $815.51 |
| 3 years | 3.40% | $1,053.87 |
| 4 years | 3.20% | $1,342.76 |
| 5 years | 3.20% | $1,705.73 |
| 7 years | 3.00% | $2,302.18 |
*6-month certificates earn dividends on a simple interest basis. All other certificate dividends are compounded daily.
How to get a PenFed Credit Union certificate
You can open a certificate and join PenFed (if you’re not already a member) by following these steps:
- Head to PenFed’s website, navigate to the certificate you want and click “Open Now”.
- If you’re already a member, click “Login”. If you’re not a member yet, click “Open Now”.
- Select your certificate term from the drop-down menu and enter your deposit amount. Click “Continue”.
- Enter your name, email address and phone number. Click “Continue”.
- Verify your phone number.
- Fund your certificate (and savings account if you’re joining) and make your certificate renewal selection.
- Review the terms and conditions and finish setting up your account(s).
Before you open a CD, compare PenFed’s certificate rates to the best CD rates to make sure you’re earning the most on your savings. Use our CD calculator to estimate how much money you’d earn in all.
How PenFed Credit Union certificate rates compare
PenFed certificate rates are much higher than the national average and beat out a lot of rates offered by traditional and online institutions. But it doesn’t have the highest rates available today, so it’s still worth shopping around.
Also, there are a few limitations to watch out for. First, PenFed certificates have no grace period. Instead, you make a renewal selection when you open the certificate. You can change this selection at any time. However, if auto-renew is turned on, your certificate will immediately begin a new term upon maturity. Be careful about this.
PenFed certificates also tend to have steeper early withdrawal penalties than other CDs. If you tap into it early, you could forfeit up to 50% of the total interest you would’ve earned at maturity.
Here’s a closer look at how PenFed’s Money Market Certificate rates compare to the competition:
| TERM | PENFED MONEY MARKET CERTIFICATE RATES | BANK OF AMERICA FIXED CD RATES | CITIBANK FIXED RATE CD RATES | CAPITAL ONE 360 CD RATES |
|---|---|---|---|---|
6 months | 3.00% APY | 4.75% APY (7 months)* | 4.75% APY | 4.25% APY |
12 months | 4.00% APY | 4.30% APY (13 months)* | 2.00% to 3.00% APY | 5.00% APY |
15 months | 4.00% APY | 0.03% APY | 4.00% APY | N/A |
18 months | 4.00% APY | 0.03% APY | 2.00% APY | 4.45% APY |
24 months | 4.00% APY | 3.00% APY (25 months)* | 2.00% APY | 4.00% APY |
36 months | 3.40% APY | 0.05% APY (37 months)* | 2.00% APY | 4.00% APY |
48 months | 3.20% APY | 0.03% APY | 2.00% APY | 3.95% APY |
60 months | 3.20% APY | 0.03% APY | 2.00% APY | 3.90% APY |
84 months | 3.00% APY | 0.03% APY | N/A | N/A |
*Rate displayed is for Bank of America’s Featured CD account.
Other products PenFed Credit Union offers
PenFed Credit Union is a full-service bank and has almost every financial product you might need. In general, it is known for having low fees and attractive rates across all its products.
It has two checking accounts and three savings accounts.
Free checking has no monthly service fee and no minimum balance requirements. There is a $25 deposit required to open the account.
Access America Checking has a $10 monthly fee — which can be waived by maintaining a minimum daily balance of $500 or by having a monthly direct deposit of at least $500. This account earns a bit of interest: You will earn 0.15% APY if your daily balance is under $20,000 and 0.35% APY if your daily balance is between $20,000 and $50,000.
Premium Online Savings earns 3.00% APY on all balances. It requires a minimum deposit of $5 to open. While that’s better than what you’ll find from traditional brick and mortar banks, you can easily find a better rate with an online bank.
Regular Savings earns 0.05% APY on all balances and also requires a $5 minimum deposit to open. However, the account makes little sense for most savers given the alternatives.
Money Market Savings earns 0.15% APY on all balances over $100,000. It also has check-writing capabilities. But the rate pales in comparison to the best money market accounts available.
PenFed Credit Union also has credit cards, auto loans, mortgage and home equity loans, personal loans, student loans and more.
However, it doesn’t have any jumbo CDs, no-penalty CDs, three-month CDs or 10-month CDs.
PenFed Credit Union review
Pentagon Federal Credit Union is a non-profit financial institution with nearly 3 million members. Founded in 1935, it provides a variety of products and services to its members, including savings accounts, checking accounts, credit cards and loans. PenFed is known for its competitive interest rates on certificates and other deposit accounts. As of April 2024, it has $34.6 billion in assets.
As a credit union, PenFed is owned by its members. This means you must join the credit union before you can open a certificate. The good news is, unlike other credit unions that have strict fields of membership, everyone can join PenFed. All you need to do to join is open a savings account with a minimum $5 deposit.
Frequently asked questions (FAQs)
Because PenFed is a credit union, its certificates are insured by the National Credit Union Administration (NCUA) — not the FDIC. NCUA insurance is nearly identical to FDIC insurance when it comes to protecting you from bank failures.
Yes, you can open more than one PenFed certificate. In fact, laddering your CDs by opening multiple accounts with different terms can be a great way to access your money on a rolling basis, so it’s not all locked up at once.
Currently, PenFed’s highest certificate rates you can earn are: 4.20% APY on a 12-, 15-, 18- and 24-month Money Market Certificate. While these rates are attractive, you might be able to snag higher rates with an online bank. Compare PenFed’s certificate rates to the best one-year CD rates to make sure you’re getting the best deal.
PenFed certificates have early withdrawal fees that are stricter than some financial institutions. For six-month terms, the penalty is up to 90 days’ dividends. For all other term lengths, you lose up to 30% of the dividends you would’ve earned at maturity.
