Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective.
- Pentagon Federal Credit Union (federally insured by the NCUA) offers in-person banking for residents of 13 US states, DC, Guam, and Puerto Rico, and you can bank digitally if you don’t live near a branch.
- With PenFed, you’ll earn competitive rates on your savings and money market certificate balances, and you can earn interest on your checking account balance.
- PenFed’s two weak links are its money market accounts that pay low rates, and its six-month certificates, which pay simple interest rather than compounding.
- It’s easy to become a member of PenFed, even if you aren’t a member of the military and don’t work for what the company lists as a qualifying employer.
- See Business Insider’s picks for the best high-yield savings accounts »
Pentagon Federal Credit Union, or PenFed, offers competitive rates on savings and certificates (the credit union version of a CD), and you may qualify to earn interest on your checking account balance. The credit union has branches in 13 US states, Washington DC, Guam, and Puerto Rico, but you can bank digitally with PenFed if you don’t live near a branch.
PenFed makes it easier to become a member than most credit unions, so it’s a good option for people who prefer a credit union to a bank but aren’t eligible to join some other credit unions.
You’re eligible if you have served in the military or work at qualifying associations or organizations. But if you don’t meet any of the regular qualifications, you can simply select “None of the above apply, but I would like to join PenFed” on the online application, and you still may be accepted. You’ll also need to pay and maintain a balance of $5 in a PenFed account.
You might like banking with Pentagon Federal Credit Union if you:
- Want to earn a competitive APY on your savings account or certificate
- Want to earn interest on your checking account balance
- Plan to open a certificate with a term longer than five years
- Are comfortable banking digitally, OR live near a branch
You might not like banking with Pentagon Federal Credit Union if you:
- Value accounts that compound interest daily rather than monthly
- Don’t qualify to earn interest on your checking account balance
- Want to earn a competitive APY on a money market account
- Don’t qualify to waive monthly fees for the checking account
- Don’t have $1,000 to open a certificate
- Want a six-month certificate that compounds interest
- Aren’t comfortable banking digitally, OR don’t live near a branch
The PenFed Premium Online Savings account pays a competitive APY — you can find slightly higher rates elsewhere, but it’s definitely up there. PenFed only requires $5 to open a savings account, and the credit union doesn’t charge monthly fees.
The main downside is that your money will compound monthly, whereas many institutions’ savings accounts compound your interest daily and pay monthly.
Monthly compounding ends up earning you less interest than daily compounding, and depending on how high your balance is, this may or may not make a big difference in how much you earn.
Not all checking accounts pay interest, so it’s nice that you can earn interest with PenFed Access America Checking — but you must receive monthly direct deposits of $500 or more to earn it.
You’ll earn 0.20% APY on balances under $20,000, and 0.50% APY on balances between $20,000 and $50,000. As with the savings account, interest compounds monthly, not daily.
You can definitely find a checking account with lower fees than this one. PenFed charges a $10 monthly fee, although you can waive the fee if you maintain a $500 daily balance or receive monthly direct deposits of $500 or more.
PenFed has a large ATM network, but it charges $1.50 when you use an out-of-network ATM. Many banks charge a $2.50 out-of-network ATM fee, but you can find plenty that don’t charge a fee and even reimburse any out-of-network ATM fees charged by ATM providers.
Don’t be thrown off by the term “money market certificate.” A PenFed Money Market Certificate serves basically the same purpose as a CD: You open an account for a set amount of time, lock in a rate, and can either access the money when the term ends or pay a fee to access funds early.
Money market certificates are probably the credit union’s strongest product. Terms go up to seven years, whereas many banks only offer CD terms up to five years. Rates are competitive, and unlike other PenFed accounts, interest compounds daily and is paid monthly, meaning you earn more in interest.
The six-month certificate is the weak link among the money market certificates. This certificate earns simple interest, so it doesn’t compound. With other institutions, you can find a six-month certificate that compounds interest.
Also, beware that early withdrawal penalties are high for the shorter-term certificates. PenFed charges 365 days interest for an early withdrawal for certificates of 12 months or more. That’s not so bad for a seven-year term, but it’s steep for a one-year term.
The PenFed Money Market Savings account will send you paper checks, but the account doesn’t come with a debit card. You can also find a higher APY elsewhere, especially if your balance is under $10,000. All in all, the money market account is a weak link for PenFed.
PenFed has 68,000 free ATMs nationwide. It also has around 50 branch locations in Washington DC, Puerto Rico, and Guam, and in the following 13 US states:
- New Jersey
- New Mexico
- New York
- North Carolina
PenFed offers a checking and money market account, two savings accounts, and various money market certificates with terms up to seven years. Its Premium Online Savings Account and Money Market Certificates are its strongest products, and the checking account is a worthwhile option if you can opt out of the monthly fees and qualify to earn interest.
To contact customer service with questions, call Monday through Friday, 7:00 a.m. to 11:00 p.m. ET. Or call Saturdays from 8:00 a.m. to 11:00 p.m. ET, or Sundays from 9:00 a.m. to 5:30 p.m. ET.
You can also contact customer service via email, snail mail, or fax, but there is no live online chat option.
Your PenFed accounts are federally insured by the NCUA for $250,000, or $500,000 for joint accounts.
|Pentagon Federal Credit Union||Navy Federal Credit Union (federally insured by the NCUA)||Alliant Credit Union (federally insured by the NCUA)|
|Accounts||Savings, checking, money market account, certificates||Savings, checking, money market account, certificates||Savings, checking, kids savings, teen checking, certificates|
|Branch locations||13 US states, DC, Guam, Puerto Rico||30 US states, DC, Guam, overseas||Online only|
|Opening deposits||$5 – $1,000||$0 – $1,000||$0 – $1,000|
|Monthly service fees||$0 – $10||$0 – $10||$0|
|ATM access||Network; $1.50 out-of-network fee||Network; refunds up to $20/month in out-of-network fees||Network; refunds up to $20/month in out-of-network fees|
Pentagon Federal Credit Union review vs. Navy Federal Credit Union review
Your choice between PenFed and Navy Federal will likely come down to two main factors: membership eligibility and branch locations.
It’s more difficult to join Navy Federal than PenFed; you must be tied to the armed forces or have a family member who is already a member of the credit union.
If you qualify to join both credit unions, your decision may rely on the closest branch. Navy Federal has more locations across more US states than PenFed.
Maybe you’re eligible to join either credit union and have nearby branches for both institutions. Your decision could come down to which type of account is most important to you.
PenFed pays a higher APY on your savings account balance. However, Navy Federal has more checking account options and pays a higher rate on money market accounts. When it comes to certificates, the higher rate will depend on the term length you’re interested in.
Pentagon Federal Credit Union review vs. Alliant Credit Union review
First things first: If you don’t like banking digitally, and you live near a PenFed branch, you should go with PenFed. Alliant is an online-only credit union with no brick-and-mortar locations.
If you’re comfortable banking online, Alliant is a worthwhile option — we’ve listed it as on of our top picks for online banking.
Otherwise, your choice could come down to which account you prioritize. If you want a money market account, you’ll want to go with PenFed, because Alliant doesn’t offer a money market account. PenFed also pays a higher APY for savings than Alliant.
Alliant pays the same rate for all checking account balances. You’ll earn more with Alliant if your balance is under $20,000, but more with PenFed if your balance is over $20,000. The better APY for a certificate will depend on your term length.
Alliant offers savings and checking accounts specifically for minors, so if you want to open accounts for your kids, Alliant might be the better fit.