Penfed raises certificate rates 12/1/18

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tbradnc
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Penfed raises certificate rates 12/1/18

Post by tbradnc » Sat Dec 01, 2018 6:14 am

Penfed raised certificate rates effective December 1, 2018.

https://www.penfed.org/accounts/money-m ... ertificate

Good timing for those of us who bought 3% certificates 5 years ago this month. I'm going to buy a good slug of 1 year certs at 2.8% and see what happens over the next 12 months.

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friar1610
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Re: Penfed raises certificate rates 12/1/18

Post by friar1610 » Sat Dec 01, 2018 9:32 am

Hmmm...I was going to roll one of those older PenFed CDs into a Navy Federal 2 year 3% cert but not sure which is better. (PenFed has a 2.95% 2 year but with a harsher EWP than NFCU.)
Friar1610

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tfb
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Re: Penfed raises certificate rates 12/1/18

Post by tfb » Sun Dec 02, 2018 2:41 am

tbradnc wrote:
Sat Dec 01, 2018 6:14 am
I'm going to buy a good slug of 1 year certs at 2.8% and see what happens over the next 12 months.
1 year Treasury is 2.7% state income tax free.
Harry Sit, taking a break from the forums.

nalor511
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Re: Penfed raises certificate rates 12/1/18

Post by nalor511 » Sun Dec 02, 2018 2:56 am

tfb wrote:
Sun Dec 02, 2018 2:41 am
tbradnc wrote:
Sat Dec 01, 2018 6:14 am
I'm going to buy a good slug of 1 year certs at 2.8% and see what happens over the next 12 months.
1 year Treasury is 2.7% state income tax free.
It's a great point. Not everyone has state tax.

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alpenglow
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Re: Penfed raises certificate rates 12/1/18

Post by alpenglow » Sun Dec 02, 2018 9:07 am

I was hoping for better rates. I imagine a lot of money will be flowing out of PenFed this Dec and Jan.

Austintatious
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Re: Penfed raises certificate rates 12/1/18

Post by Austintatious » Sun Dec 02, 2018 9:54 am

friar1610 wrote:
Sat Dec 01, 2018 9:32 am
Hmmm...I was going to roll one of those older PenFed CDs into a Navy Federal 2 year 3% cert but not sure which is better. (PenFed has a 2.95% 2 year but with a harsher EWP than NFCU.)
Yep, I'm going through the same thought process as DW's PenFed CDs close in on maturity. We've been eyeing those NFCU 2 years @ 3.0% certificates but PenFed's latest rate bump has us wondering if we should just stay and rollover at PenFed. That would certainly make life less complicated. But, as you say, the early withdrawal penalty at PenFed is clearly harsher.

mrmass
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Re: Penfed raises certificate rates 12/1/18

Post by mrmass » Sun Dec 02, 2018 9:56 am

tfb wrote:
Sun Dec 02, 2018 2:41 am
tbradnc wrote:
Sat Dec 01, 2018 6:14 am
I'm going to buy a good slug of 1 year certs at 2.8% and see what happens over the next 12 months.
1 year Treasury is 2.7% state income tax free.
Don't want to derail the post but can you show me where I can find that 1 yr for 2.7?

euroswiss
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Re: Penfed raises certificate rates 12/1/18

Post by euroswiss » Sun Dec 02, 2018 10:03 am

https://ycharts.com/indicators/1_year_treasury_rate

Actually, it dropped to 2.69 from 2.70 (earlier in the week)

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jeffyscott
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Re: Penfed raises certificate rates 12/1/18

Post by jeffyscott » Sun Dec 02, 2018 10:27 am

mrmass wrote:
Sun Dec 02, 2018 9:56 am
Don't want to derail the post but can you show me where I can find that 1 yr for 2.7?
Also here: https://www.treasury.gov/resource-cente ... data=yield

Those PenFed rates are also less than what is available in new issue brokered CDs.
Time is your friend; impulse is your enemy. - John C. Bogle

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Hayden
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Re: Penfed raises certificate rates 12/1/18

Post by Hayden » Sun Dec 02, 2018 10:35 am

Thanks for posting. Mine are set to automatically reinvest in new 5 yr certificates. That is showing 3.5%. is that bad?

weltschmerz
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Re: Penfed raises certificate rates 12/1/18

Post by weltschmerz » Sun Dec 02, 2018 10:40 am

deleted
Last edited by weltschmerz on Tue Jan 01, 2019 12:49 pm, edited 1 time in total.

stan1
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Re: Penfed raises certificate rates 12/1/18

Post by stan1 » Sun Dec 02, 2018 10:43 am

weltschmerz wrote:
Sun Dec 02, 2018 10:40 am
The daily ACH limit for withdrawals is only $5000, so that could be a tedious way to do it. Otherwise you have the wire option (which I bet has a fee) or the mailed check option (which takes time). What are folks doing?
Is that for an ACH push out of Pen Fed? When the CD lapses put it into a Pen Fed checking or savings account. Do an ACH pull initiated at the receiving financial institution.

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alpenglow
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Re: Penfed raises certificate rates 12/1/18

Post by alpenglow » Sun Dec 02, 2018 10:45 am

I'm just having Fidelity pull the money (it's an IRA). I'm actually completing the form right now.

PenFed also has a form to push the money if you'd like to go that route.

MisterMister
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Re: Penfed raises certificate rates 12/1/18

Post by MisterMister » Sun Dec 02, 2018 10:46 am

euroswiss wrote:
Sun Dec 02, 2018 10:03 am
https://ycharts.com/indicators/1_year_treasury_rate

Actually, it dropped to 2.69 from 2.70 (earlier in the week)
Yes, here's an official source:

https://www.treasury.gov/resource-cente ... =billrates

They can email a daily alert with an updated link.

For those with state tax:
At 2.69%, you are better than 2.8% with the Treasury if your state tax is higher than 3.9%. If you're buying a new Treasury you generally can't be sure what rate you're getting until after you've already bought it, but it will be close to recent numbers.

Reminder: It's cumbersome to get emergency access to the Treasury funds before maturity. There's a way to sell the bond on the secondary market. In dollars, that might actually be less of a penalty than a CD EWP (depending on how rates have moved), but a lot more complicated and time-consuming to pull off. See https://www.treasurydirect.gov/indiv/re ... l_sell.htm
Last edited by MisterMister on Sun Dec 02, 2018 11:08 am, edited 1 time in total.

stan1
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Re: Penfed raises certificate rates 12/1/18

Post by stan1 » Sun Dec 02, 2018 11:02 am

The 3% rate turned out to be a pretty good deal five years later. Congratulations to all on some successful market timing! Nothing to be ashamed of. Don't agree it was market timing? You might need to clean your mirror. A disciplined CD investor would have a ladder of 5 year CDs with 20% expiring every year. A few of us might have CDs in our asset allocation and a structured process for managing a ladder but I think most of us went all in back in 2013 with the gut response "this seems like a pretty good deal". Remember no other financial institution came close to 3% for a 5 year NCUA (FDIC) insured CD back then.

In bought the 3% CDs for my mom in 2013 when she was 80 using the proceeds from the sale of her home. She is now 85 and with her risk profile a large allocation to CDs are appropriate. The 3% interest was enough to cover most of her expenses along with her SS and some money I gift her each month. The new 3.5% rate will do the same until she has significant long term care expenses which are probably inevitable because at 85 she has no major health issues that would hasten her demise.

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whodidntante
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Re: Penfed raises certificate rates 12/1/18

Post by whodidntante » Sun Dec 02, 2018 11:07 am

MisterMister wrote:
Sun Dec 02, 2018 10:46 am
euroswiss wrote:
Sun Dec 02, 2018 10:03 am
https://ycharts.com/indicators/1_year_treasury_rate

Actually, it dropped to 2.69 from 2.70 (earlier in the week)
Yes, here's an official source:

https://www.treasury.gov/resource-cente ... =billrates

They can email a daily alert with an updated link.

For those with state tax:
At 2.69%, you are better than 2.8% with the Treasury if your state tax is higher than 3.9%. If you're buying a new Treasury you generally can't be sure what rate you're getting until after you've already bought it, but it will be close to recent numbers.

Reminder: It's cumbersome to get emergency access to the Treasury funds before maturity. There's a way to sell the bond on the secondary market. In dollars, that might actually be less of a penalty than a CD EW penalty but a lot more complicated and time-consuming to pull off. See https://www.treasurydirect.gov/indiv/re ... l_sell.htm
Fidelity and some other brokers will allow you to buy treasuries at auction. There does not seem to be any added spread or fee of any kind. Since you then hold the securities at said broker, it is then very easy to sell them early if you need to. However, the broker does earn a spread in that case.

MisterMister
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Re: Penfed raises certificate rates 12/1/18

Post by MisterMister » Sun Dec 02, 2018 11:10 am

whodidntante wrote:
Sun Dec 02, 2018 11:07 am
MisterMister wrote:
Sun Dec 02, 2018 10:46 am
euroswiss wrote:
Sun Dec 02, 2018 10:03 am
https://ycharts.com/indicators/1_year_treasury_rate

Actually, it dropped to 2.69 from 2.70 (earlier in the week)
Yes, here's an official source:

https://www.treasury.gov/resource-cente ... =billrates

They can email a daily alert with an updated link.

For those with state tax:
At 2.69%, you are better than 2.8% with the Treasury if your state tax is higher than 3.9%. If you're buying a new Treasury you generally can't be sure what rate you're getting until after you've already bought it, but it will be close to recent numbers.

Reminder: It's cumbersome to get emergency access to the Treasury funds before maturity. There's a way to sell the bond on the secondary market. In dollars, that might actually be less of a penalty than a CD EW penalty but a lot more complicated and time-consuming to pull off. See https://www.treasurydirect.gov/indiv/re ... l_sell.htm
Fidelity and some other brokers will allow you to buy treasuries at auction. There does not seem to be any added spread or fee of any kind. Since you then hold the securities at said broker, it is then very easy to sell them early if you need to. However, the broker does earn a spread in that case.
Very good point. I have used Fidelity to buy Treasuries and you're right about no apparent fee. I bought one security in Fidelity and another identical one outside and rates turned out to be identical.
whodidntante wrote:
Sun Dec 02, 2018 11:07 am
...it is then very easy to sell them early if you need to
Of course everything is relative. You have to offer your security up for sale at some price. And there is no guarantee anyone will buy it at your price. It could be an iterative process I'd hate to have to rely on in an emergency unless I'd been through it a few times--especially for a large amount of money where doing it the wrong way could be expensive.
Last edited by MisterMister on Sun Dec 02, 2018 11:59 am, edited 1 time in total.

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Youngblood
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Re: Penfed raises certificate rates 12/1/18

Post by Youngblood » Sun Dec 02, 2018 11:15 am

weltschmerz wrote:
Sun Dec 02, 2018 10:40 am
alpenglow wrote:
Sun Dec 02, 2018 9:07 am
I was hoping for better rates. I imagine a lot of money will be flowing out of PenFed this Dec and Jan.
For those looking to withdraw funds, had anyone looked into the best way to do this? The daily ACH limit for withdrawals is only $5000, so that could be a tedious way to do it. Otherwise you have the wire option (which I bet has a fee) or the mailed check option (which takes time). What are folks doing?
I opened one of their no fee checking accounts and then went with the mail option. The 5K limit is annoying.

YB
"I made my money by selling too soon." | Bernard M. Baruch

fsrph
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Re: Penfed raises certificate rates 12/1/18

Post by fsrph » Sun Dec 02, 2018 12:15 pm

Austintatious wrote:
Sun Dec 02, 2018 9:54 am
friar1610 wrote:
Sat Dec 01, 2018 9:32 am
Hmmm...I was going to roll one of those older PenFed CDs into a Navy Federal 2 year 3% cert but not sure which is better. (PenFed has a 2.95% 2 year but with a harsher EWP than NFCU.)
Yep, I'm going through the same thought process as DW's PenFed CDs close in on maturity. We've been eyeing those NFCU 2 years @ 3.0% certificates but PenFed's latest rate bump has us wondering if we should just stay and rollover at PenFed. That would certainly make life less complicated. But, as you say, the early withdrawal penalty at PenFed is clearly harsher.
I am in the same situation - leave maturing CDs at Penfed or transfer out? I'm leaning to a 1 yr, 2.8% CD at Penfed for simplicity but this 1yr 3% deal caught me eye.
https://www.depositaccounts.com/banks/a ... cu/offers/ . Don't know if it's worth opening a new account for a 0.2% higher yield.

Fray
"Success is getting what you want. Happiness is wanting what you get." | Dale Carnegie

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alpenglow
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Re: Penfed raises certificate rates 12/1/18

Post by alpenglow » Sun Dec 02, 2018 1:14 pm

2 year brokered CDs are yielding over 3% at this point. It will be much simpler to have all of my wife's accounts back at the same custodian.

Scooter57
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Re: Penfed raises certificate rates 12/1/18

Post by Scooter57 » Sun Dec 02, 2018 3:06 pm

Penfed will move the money into your savings account when the CD matures. Before that happens, link your Vanguard account to the Penfed (or any credit union) savings account. Then the day after the CD matures and have Vanguard pull all the money out of the saving account by initiating the transfer from Vanguard. I have done that with PenFed with no problems.

I also have a lot of money maturing from their 3% CDs. The brokered CD rates are competitive with all but the best CU CDs and are so much easier to deal with. The only issue is that you have to watch that $250,000 FDIC insurance limit per institution because you can't extend it the way you can with direct CDs by creating POD trust accounts.

I have been buying the short treasuries too, though my state tax in Massachusetts is actually much lower than what I'd pay in most other states that provide an equal level of public services.

I do hope a reasonable 4% yield shows up soon. The ones I've seen so far were a bit too much hassle. I don't like CDs where I have to mail things and the institution won't lock the rate nor do I like obscure CUs or banks I never heard of before. I like to keep a 5 year ladder going and the inversion of the rate curve is making it really hard to pull the trigger on anything 5 years away. But if we have a recession and rates tank again, I'll be kicking myself if I don't have a decent 5 year rung set up.

Candor
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Re: Penfed raises certificate rates 12/1/18

Post by Candor » Sun Dec 02, 2018 9:42 pm

I'm surprised to see https://www.depositaccounts.com/ is not currently up to date on PenFed rates. I guess I need to start checking the individual banking sites if I want the latest accurate rates.

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Re: Penfed raises certificate rates 12/1/18

Post by fsrph » Sun Dec 02, 2018 10:26 pm

Candor wrote:
Sun Dec 02, 2018 9:42 pm
I'm surprised to see https://www.depositaccounts.com/ is not currently up to date on PenFed rates. I guess I need to start checking the individual banking sites if I want the latest accurate rates.
This was posted on Depositaccounts.com on Sat, Dec 1st on their blog.
https://www.depositaccounts.com/blog/

Francis
"Success is getting what you want. Happiness is wanting what you get." | Dale Carnegie

FlamingoTime
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Re: Penfed raises certificate rates 12/1/18

Post by FlamingoTime » Mon Dec 03, 2018 1:19 am

I have a question. With the above EWP, what would the penalty be after only a month or two? I'm concerned that I will lock in at 3.5% and the rates move to 4% pretty quickly. Would I only lose the interest earned thus far? Or is there another penalty as well?

Austintatious
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Re: Penfed raises certificate rates 12/1/18

Post by Austintatious » Mon Dec 03, 2018 9:23 am

FlamingoTime wrote:
Mon Dec 03, 2018 1:19 am
I have a question. With the above EWP, what would the penalty be after only a month or two? I'm concerned that I will lock in at 3.5% and the rates move to 4% pretty quickly. Would I only lose the interest earned thus far? Or is there another penalty as well?
DW has some of those 3% for 5 years IRA certificates at PenFed. They are to mature in early January. She's received a letter for each certificate, a bit over 5 weeks prior to the maturity date, reminding her of the current principal and the the maturity date. They also mention that, at maturity, the certificates will "be renewed for 60 months" and that, since they do not yet know what the dividend rate and percentage yield will be at maturity, they will send her another letter notifying her of the same.

They also advise that the early withdrawal penalty for Certificates with terms greater than 6 months was modified as of September 1, 2015 and is:
The penalty in the first year is all dividends earned. Thereafter, the penalty will equal 30% of what would have been earned if the Certificate had reached maturity, not to exceed total dividends earned.
If that's the only penalty and I assume that it is, it seems to me that a withdrawal and subsequent reinvestment at a higher rate, within that first year, would result in minimal loss and possibly even a net gain.

PenFed representations in place when these IRA certificates were purchased in January, 2014 stated the following:
Make partial withdrawals for qualified distributions from IRA certificates without early redemption penalty
and
Partial withdrawals for members over the age 59 1/2 (including Required Minimum Distributions) and qualified distributions regardless of age (including Disability) may be processed from IRA certificates without incurring an early redemption penalty.
I see no such representations on the current PenFed website. An email to PenFed asking if they were still in effect resulted in a request to call them for the answer, which I will be doing later today.

MisterMister
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Re: Penfed raises certificate rates 12/1/18

Post by MisterMister » Mon Dec 03, 2018 11:45 am

Austintatious wrote:
Mon Dec 03, 2018 9:23 am
FlamingoTime wrote:
Mon Dec 03, 2018 1:19 am
I have a question. With the above EWP, what would the penalty be after only a month or two? I'm concerned that I will lock in at 3.5% and the rates move to 4% pretty quickly. Would I only lose the interest earned thus far? Or is there another penalty as well?
If that's the only penalty and I assume that it is, it seems to me that a withdrawal and subsequent reinvestment at a higher rate, within that first year, would result in minimal loss and possibly even a net gain.
Yes, if you move from a 5-year 3.5% to a 5-year 4.0% after 6 months and hold to term, the rate looks to be about 3.63% considering penalty lost interest. But wait 9 months or longer and you'd be losing if you move.

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