PenFed Review: Is It the Right Credit Union for You?

PenFed Credit Union is worth it if you fit the requirements.
PenFed Review: Is It the Right Credit Union for You?
Eva-Katalin / Getty Images

PenFed Credit Union (Pentagon Federal Credit Union) is a credit union that specializes in banking for members of the armed forces, Department of Defense and Homeland Security, military associations, as well as eligible veterans, retirees and their families.

If you are not at all affiliated with any of these departments or the armed forces, you can become an eligible customer if you donate to a select charitable military organization of PenFed’s choosing.

PenFed offers checking and savings accounts, loans, money market accounts, IRAs and many more banking products. Before opening an account with PenFed, consider the details of each specific account to see if it is the best place to do your banking.

Who Is PenFed Credit Union Best For?

PenFed Credit Union is best for anyone looking for a traditional banking experience and is either affiliated with the U.S. armed forces, military or is in the Department of Defense or Department of Homeland Security. However, you can still bank with PenFed if you aren’t affiliated with any of these. Simply make a select donation to any of these military programs that PenFed supports:

  • Military Heroes Fund
  • Dream Makers
  • Asset Recover Kits
  • The Defenders Lodge

If you are looking to open a new account or change your financial institution, consider the pros and cons of banking with PenFed.

Pros and Cons of Banking With PenFed Credit Union 
ProsCons
24/7 access to your account with PenFed’s mobile appPhysical branches are not located throughout the U.S.
Grow your money to pay for education with Coverdell Education Savings CertificatesIf not affiliated with the U.S. armed forces, military, Department of Defense or Department of Homeland Security, you must donate to a select organization to be eligible to bank with PenFed
Access to PenFed Wealth Management CenterMinimum opening deposit required to open checking account

[Back to top]

Who May Want To Skip PenFed Credit Union?

If you are not affiliated with the U.S. armed forces or the Department of Defense or Department of Homeland Security, you may want to skip PenFed because you will have to donate to a military charitable organization to be eligible.

If you have the money to donate and want to, then you need to decide if your banking needs and habits align with what PenFed Credit Union is best for or worst for before banking with this financial institution.

Who Is PenFed Credit Union Best For and Worst For?

Best ForWorst For
Creating a relationship with employees at a physical branch if you live near onePeople who like banking in person but do not live near a physical branch
Interest checking with high APY ratesCustomers who want to avoid monthly service fees
Someone who is affiliated with the U.S. armed forces, military, Department of Defense or Department of Homeland SecurityCustomers not comfortable with digital banking like online wallets

[Back to top]

Types of Accounts Available

PenFed Credit Union has an array of accounts available to its customers, but those accounts have varying fees and features to consider. Depending on your account balance, banking expectations and financial habits, certain accounts may be more worth your money than others.

Consider the account types, features, fees and rates before opening an account.

Types of  PenFed Accounts 
Account TypeFeaturesRatesFeesComparative Rates
Access America Checking
  • Available overdraft protection
  • Linked digital wallet
  • 0.50% APY for a balance between $20,000 to $50,000
  • 0.20% APY for a balance below $20,000
$10 monthly service fee if balance is below $500Wells Fargo’s Everyday Checking has no interest with a $10 monthly service fee
Regular SavingsAccessible online, through the mobile app and at a physical branch0.05% APY on all account balances$5 minimum deposit to open accountBank of America’s Standard Savings APY is 0.03%
Premium Online SavingsThis account is only available online and through the mobile app1.60% APY for account balances below $250,000$5 minimum deposit to open accountNavy Federal’s online savings APY is 0.25%
Money Market Accounts
  • Money Market Savings
  • Money Market Certificates
  • Money Market Savings’ APY is 0.15% on a balance above $100,000
  • Money Market Certificate’s APY is 1.70% for a 12-month term
No fees for both Money Market Savings and Money Market CertificatesAlly Bank has an APY of 0.75% on all account tiers
Certificate of DepositCoverdell Education Savings Certificates1.70% APY for a 3-year term; terms range from 1 to 7 years$25 minimum opening depositSantander Bank has an APY of 1.80% for an 18-month term
Individual Retirement Account
  • IRA Certificate
  • IRA Premier Accounts
  • IRA Savings Accounts
  • IRA Certificate: as high as 1.80% APY
  • IRA Premier Accounts: 0.05% APY
  • IRA Savings Accounts: 0.05% APY
  • IRA Certificate: Minimum opening balance is $1,000
  • IRA Premier Accounts: Minimum opening balance is $10,000
  • IRA Savings Accounts: Minimum opening balance is $25
Ally Bank has an IRA High Yield CD APY rate of 2.00% for a 12-month term
Investment (Nonbank) OptionPenFed Wealth Management offered through CUNA Brokerage Services, Inc.Rates depend on your unique planFees depend on your unique planN/A
Loans
  • Auto Loans
  • Mortgages and Home Equity
  • Personal Loans
  • Student Loans
Fees will depend on your specific loan agreement and terms
  • Citibank: Personal Loans: 7.99%-23.99% APR
  • Citibank: Mortgage Loan: 4.190% APR for 30-year fixed-rate loan

These account types, rates and fees are competitive with other financial institutions that are not credit unions like Chase Bank, Capital One and Chime Bank, as well as other international credit unions.

Check Out: 15 Best New Bank Promotions and Bonuses

[Back to top]

Checking

PenFed’s Access America Checking offers a debit card with over 68,000 fee-free ATMs. This is the perfect account for a customer looking to link a checking account with their digital wallet, and it competes with the best checking accounts out there.

Features

  • You can earn 0.50% APY on your account balance between $20,000 to $50,000.
  • You can earn 0.20% APY on your account balance below $20,000.

Pros

  • Online and mobile app availability
  • Overdraft protection available

Cons

  • Need $500 account balance in order to waive monthly fee
  • Overdraft protection needs credit approval

Learn More: Best Second-Chance Checking Accounts

[Back to top]

Savings

PenFed Credit Union’s Regular Savings account is competitive with all the other basic savings accounts out there. Using this account establishes your part ownership in PenFed.

Features

  • 0.05% APY for all account balances
  • Up to $250,000 is backed by the NCUA

Pros

  • This account is accessible by ATM with a free ATM card given to you by PenFed.
  • Dividends are compounded monthly and credited to your account.

Cons

  • $5 opening deposit required
  • The APY rate is subject to change at any time.

[Back to top]

Online Savings

PenFed’s Premium Online Savings is worth considering if you want to grow your money. This is another account that can help you easily establish a membership with PenFed Credit Union.

Features

  • High APY rates
  • Free online transfer

Pros

  • First $250,000 in your account is NCUA-insured
  • No monthly maintenance fees

Cons

  • The APY rate is only for your first $250,000 in the account.
  • A $5 minimum deposit is required to open the account.

[Back to top]

Money Market Account

PenFed offers three different types of Money Market accounts, but one will be detailed as an IRA product. The other two are Money Market Savings and Money Market Certificates.

Features

  • Money Market Savings features high APY rates for account balances at $10,000 and above.
  • Money Market Certificates features high APY rates, but in a locked predetermined term or maturity.

Pros

  • Money Market Savings has no monthly service fees and you can access your funds online.
  • Money Market Certificates allows you to renew or close at the end of your term.

Cons

  • Money Market Savings doesn’t offer its highest APY rates until you have an account balance above $100,000.
  • Money Market Certificates require a minimum of $1,000 to begin your investment.

[Back to top]

CDs

PenFed offers three certificates of deposit products: Money Market Certificates, IRA Certificates and Coverdell Education Savings Certificates. The Coverdell Education Savings Certificates will only be detailed in this section as the other two are detailed in other sections.

Features

  • Coverdell Education Savings Certificates are tax-free because this CD is specifically for education.
  • You can choose from a variety of terms, depending on your financial needs.

Pros

  • First $250,000 saved is insured by the NCUA
  • Funds can be used for eligible elementary and secondary school tuitions

Cons

  • $500 minimum deposit needed to begin investing
  • Can only contribute $2,000 maximum to your CD each year

[Back to top]

Individual Retirement Accounts

PenFed Credit Union offers three different IRA products: IRA Certificates, IRA Premier Accounts and IRA Savings Accounts. Each has its own unique APY and features available.

Features

  • IRA Certificates feature daily compounds that are paid out monthly.
  • IRA Premier Accounts feature the same kind of flexibility as a liquid investment.
  • IRA Savings Accounts have an opening account deposit of $25.
  • All three products are available as an IRA, Roth or SEP IRA.

Pros

  • Traditional IRAs have no taxes taken out until distribution.
  • Roth IRAs are perfect for those who plan on retiring in a high-income bracket.
  • SEP IRAs have no taxes taken out until distribution and contributions can generally be deducted come tax season; perfect for the self-employed.

Cons

  • Traditional IRAs must have minimum distributions made at age 70 1/2.
  • Roth IRAs will tax your contributions.
  • SEP IRAs have a limit to annual contributions of 20% of net earnings.

[Back to top]

Investment (Nonbank) Options

PenFed’s Wealth Management uses CUNA Brokerage Services, Inc. as its investment platform. Simply fill out a quick application to connect with a financial advisor.

The investment products are for all of life’s big stages.

Features

  • Retirement
  • College
  • 401(k)/TSP
  • Insurance
  • Investing
  • IRA Options

Pros

  • Find a unique investment strategy that works for your unique goals.
  • CBSI is a member of FINRA/SIPC.

Cons

  • Not NCUA/NCUSIF/FDIC-insured
  • CSBI is a separate institution and does not have the guarantee of returns insured by PenFed.

[Back to top]

Loans

PenFed Credit Union offers many different loan products. Depending on your needs and banking habits, you can find a specific loan agreement with your financial advisor:

Features

  • Auto Loans
    • New Auto Loan
    • Used Auto Loan
    • Refinance New Auto Loan
  • Mortgages and Home Equity
    • Conventional Fixed Rate Mortgage: Available to all credit union members — these loans are for any dollar amount below $484,350.
    • VA Loans: Available to veterans, service members and eligible beneficiaries like family members — this loan’s dollar amount is the same as the most current VA home loan limits set by the U.S. Department of Veteran Affairs.
    • Jumbo Loan: Available to all credit union members — this loan is for $484,350 to $2 million.
  • Personal Loans
    • You have immediate access to your loans and no hidden fees or origination fees.
  • Student Loans
    • In-School Student Loan Options: for students’ higher education needs
    • Parent Loan: Pay for your student and take responsibility for the loan.
    • Scholarship Search: access to over 3.5 million scholarships

Pros/Cons

The pros and cons of these loans really depend on your specific loan agreement and loan term. Consider your banking habits and banking history before signing up for any loans.

Find Out: 10 Best National Banks of 2019

[Back to top]

How To Bank With PenFed Credit Union

Banking with PenFed Credit Union is easy. There are four major ways to bank with PenFed:

  1. Visit a PenFed branch using the online locator.
  2. Call a customer service representative at 800-247-5626.
  3. Email all inquires to PenFed Credit Union.
  4. Use the mobile app and send a message via online banking.

Technology

You can use either PenFed’s online banking features or its award-winning mobile app. Both give you 24/7 access to your funds from anywhere in the world (that has service or Wi-Fi). The mobile app gives you access to your funds, allows money transfers and deposits checks. Online banking can do the same things the mobile app does except for depositing checks.

[Back to top]

Fees

There are many normal fees associated with PenFed’s banking products like check stop payment fees and out-of-network ATM withdrawal fees, but the most common fee you will have to deal with is the monthly maintenance fee for your Access America Checking Account.

The fee is a $10 monthly maintenance fee that can be waived if you have a daily account balance minimum of $500 or you make a minimum of $500 in direct deposits into this account each month.

[Back to top]

Availability of Funds

The availability of funds depends on how, when and for how much you deposit into your account.

  • Same business day availability of receiving deposit:
    • Cash and personal check deposit up to $200
    • Direct deposit
    • Wire transfers and electronic deposits
    • Nonpersonal check deposits up to $500
    • U.S. Treasury checks
  • For checks over $5,000, the credit union can hold onto any portion of that check above $5,000 for what it deems a “reasonable” length of time.

[Back to top]

Summary of PenFed Credit Union

Ultimately PenFed Credit Union works well for service members, active military, veterans, military beneficiaries and employees of the Department of Homeland Security and/or Defense.

The benefits and drawbacks of PenFed depend on your banking expectations.

Benefits and Drawbacks of PenFed Credit Union
BenefitsDrawbacks
High APY for Money Market AccountsIf not affiliated with U.S. armed forces, must make a donation to join the credit union
Checking accounts earn interestChecking account has a monthly maintenance fee
Access to PenFed Wealth Management CenterPhysical branches are not throughout the U.S.

PenFed Credit Union is competitive with the best banks out there for anyone looking to grow their money and to have a modern banking experience. If you are a member of the U.S. armed forces or a beneficiary, this credit union is worth your money. 

[Back to top]

More From GOBankingRates

Rates and fees are accurate as of Dec. 12, 2019, and are subject to change. This content is not provided by PenFed Credit Union. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone and have not been reviewed, approved, or otherwise endorsed by PenFed Credit Union.

About the Author

Jared Nigro is from Pittsburgh, which is obvious by the way he gravitates toward cheese at parties. He is a comedy writer from The Groundlings Sunday Company, Upright Citizens Brigade and has his own digital show on Comedy Central called “Broken People.” When he isn’t being funny, he’s reading books on debt and finance and listening to his favorite finance podcast, ChooseFI.