Pentagon Federal Credit Union (PenFed) Offers 5.25% CDs

Pentagon Federal Credit Union (PenFed) has announced its new CD rates. The highest CD pays 5.25% for a 7-year term with a $1,000 minimum deposit. Their 6-month CD only pays 3.85%. PenFed calls their CDs "Money Market Certificates." Get a full list of PenFed rates and terms here.

• Note, for shorter term CDs, I like the 5.05% APY 5-month CD offered by Wachovia Bank.

Features of PenFed CDs:

Automatic Renewal:

Your certificate will automatically renew at maturity unless you change your options via online banking. You can also call or write with other instructions.

Dividend Options for Your Money Market Certificate

You choose whether your certificate dividends are paid monthly or at maturity. You can also choose from the following dividend payment options:

1. Add your dividends to the certificate
2. Transfer them to your Regular Share, Checking, or Money Market Savings Account (MMSA)
3. Have them sent to you in the form of a check

If you choose option 1 above, then you may select any of the three options listed below for the payment of dividends at certificate maturity. However, if you select option 2 or 3 above, then your last dividend payment at certificate maturity will occur in the same manner as the payment of principal you select below.

In the case of 1-, 2-, 3-, 4-, 5- and 7-Year Certificates, choosing option 1 above produces a higher yield, as dividends will compound on the dividends paid into the certificate.

Three options also exist for the payment of principal at certificate maturity

1. Use the principal to automatically renew the certificate
2. Have it transferred to your Pentagon Federal Regular Share, checking account, or Money Market Savings Account
3. Have it sent to you by check

Locked-in Rates: Once you purchase a Pentagon Federal Money Market Certificate, the rate is locked in for the term of your certificate. The 6-Month Certificate earns dividends on a simple interest basis, while the dividends on all other certificates are compounded daily, giving you maximum returns.

PenFed says: "Your savings insured to $100,000 by the National Credit Union Administration (NCUA), an agency of the U.S. Government. Traditional and Roth IRAs (Individual Retirement Accounts) are insured to $250,000 by the NCUA. We do business in accordance with the Federal Fair Housing Law and the Equal Credit Opportunity Act.Rates are current as of December 2007 unless otherwise noted and are subject to change. "

You need to join PenFed to get their great rates. If you are not already a member of a eligible organization, you can get the rates by joining "The National Military Family Association" (NMFA), a leading non-profit advocacy organization for military families. NMFA's membership is open to anyone who supports their important work on behalf of military families. One of the benefits of membership in NMFA is that being a member makes you eligible to join Pentagon Federal Credit Union.

Get a full list of PenFed rates and terms plus information on how to join here.

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