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PenFed Credit Union CD Rates, Checking, Savings, Money Market, and IRA Accounts

Posted February 12, 2018 8:00 a.m. EST

PenFed Credit Union—also known as Pentagon Federal Credit Union—got its start in 1935. Since then, it has grown to become one of the largest credit unions in the country, with over 1.6 million members and $24 billion in assets. While it does offer in-person branches, anyone can also access their accounts online.

Like most credit unions, PenFed Credit Union restricts their membership. Luckily, most can get in with the right credentials or by making a small one-time donation to a good cause.

If you’re a government employee (including members of the military), work on a military base or for a qualifying organization, or a relative of someone who does meet these qualifications, you’re immediately eligible for membership.

For the rest of us, we can join simply by becoming a member of the Voices for America’s Troops or National Military Family Association for a one-time fee of $17.

In this review we’ll look at the rates and terms offered for each of their financial products. This will help you make an informed decision about whether PenFed is the right credit union for your banking needs.

All rates are current as of Feb. 6, 2018.

In this review, you’ll learn:

PenFed CD Rates

PenFed’s Coverdell Education Savings Certificates

PenFed checking account

PenFed Money Market Savings Account

PenFed Savings Account

PenFed IRA CD accounts

PenFed IRA Savings account

PenFed IRA Premier Account

Overall review of PenFed’s banking products

PenFed CD Rates

PenFed Money Market Certificates

High rates, great dividend payment, and renewal flexibility make this a great choice.

Term

APY

6 months

1.30%

12 months

1.87%

15 months

1.92%

18 months

1.97%

2 years

2.02%

3 years

2.07%

4 years

2.17%

5 years

2.43%

7 years

2.48%

  • Minimum amount to open an account: $1,000
  • Minimum amount to earn APY: $1,000
  • Early withdrawal penalty: For a six-month CD, you’ll forfeit any dividends earned (if you withdraw the amount before 90 days), or a full 90 days’ worth of dividends (if you withdraw it after 90 days, but before the CD matures). For a longer-term CD, you’ll forfeit all dividends earned (if you withdraw the amount within the first year), or 30% of what you would have earned if you kept the CD to maturity (if you withdraw the amount after one year, but before the CD matures).
  • One of the nice things about PenFed’s CDs is that they are very flexible in terms of how your dividends are paid out and what happens to the CD upon maturity.You can choose to have dividends reinvested into your CD or paid out each month by direct deposit into another PenFed Credit Union account, or mailed to you as a check. Of course, it’s always best to leave the dividends to pile up in your CD. If you choose to have dividends paid out, your APY may be lower than the stated rate.When you set up your CD, you’ll choose what happens at maturity. You can choose from three options: Renew the CD for the same term, deposit the funds into another PenFed account, or have a check mailed to you. There is no grace period for you to choose what happens after it matures as with most banks; rather, you choose upfront. However, you can change your mind at any time.The only down side of this CD is that you cannot make a partial withdrawal. If you need to withdraw the cash early, you can only remove the full amount. If you do need to withdraw the money, you can also only do so after giving written notice.

How to get a PenFed Money Market Certificate

To get a PenFed Money Market Certificate, you’ll need to be a member of the credit union. Joining is easy and only takes a few minutes. You may be eligible for membership based on your employer (such as the military) or by joining the Voices For America’s Troops or National Military Family Association for a one-time $17 fee.

As a part of the application process you’ll need to deposit at least $5 into a Share savings account. Once this is done, you can open up your CD with a minimum deposit of at least $1,000.

PenFed Credit Union will mail you a signature form to complete your account application, but you can still open new accounts online before completing this final check mark.

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NCUA Insured

How PenFed’s CDs compare

PenFed offers very competitive rates on their CDs. Each of their CDs carry a higher-than-average interest rate. These high rates, combined with flexibility on how you earn dividend payments and how the CD is renewed, make this a great choice for people looking for a well-rounded CD option from a credit union.

Still, if earning the top rates are your priority, there are currently higher CD rates out there with certain banks.

PenFed’s Coverdell Education Savings Certificates

Lower minimum deposit requirements make this account more accessible for parents.

Term

APY

1 year

1.82%

2 year

1.97%

3 year

2.02%

4 year

2.12%

5 year

2.38%

7 year

2.43%

  • Minimum amount to open an account: $500
  • Minimum amount to earn APY: $500
  • Early withdrawal penalty: If you withdraw the CD before one year has passed, you’ll forfeit any dividends earned. If you withdraw the CD after one year has passed, you’ll pay a penalty equal to 30% of what you would have earned if you had kept the CD to maturity.

PenFed’s Coverdell Education Savings Certificates are a great tool to save for college. These CDs have a lower (i.e., more accessible) minimum account opening requirement than their regular Money Market CDs—just $500. You can contribute up to the maximum yearly amount set by the IRS—currently $2,000 for 2018—to this Coverdell account.

When you set up your account you can choose what happens when the CD matures: either renew the CD for a similar term, or deposit it into a new Coverdell Education Share account. Unlike PenFed’s regular CDs, you do have the option to make a partial withdrawal during the term of the CD if needed, provided that it doesn’t drop the amount in your CD below $500 (if that happens, the entire CD will be closed and deposited into a Coverdell Education Share account). If you do make a partial withdrawal, that amount will also be subject to the early withdrawal penalties described above.

How to get PenFed’s Coverdell Education Savings Certificates

To get a PenFed Coverdell Education Savings Certificate, you’ll need to be a member of the credit union. Joining is easy and only takes a few minutes. You may be eligible for membership based on your employer (such as the military) or by joining the Voices For America’s Troops or National Military Family Association for a one-time $17 fee.

As a part of the application process you’ll need to deposit at least $5 into a Share savings account. Once this is done, you can open up your Coverdell account with a minimum deposit of at least $500.

Once your application is complete, or if you’re already a member, you can open any new financial product directly in your online account. PenFed Credit Union will mail you a signature form. However, you can still open new accounts before completing this final check mark.

LEARN MORE

NCUA Insured

PenFed checking account

Great interest rates, but make sure you can meet the requirements to waive the monthly fee.

APY

Account Balance

0.20%

Up to $19,999.99

0.50%

$20,000 - $50,000

  • Minimum amount to open an account: $25
  • Monthly account maintenance fee: $10
  • How to avoid the account maintenance fee: Keep $500 or more in your account, or have at least $500 direct deposited into your account each month
  • ATM fee: None for using either a PenFed ATM or a non-PenFed ATM; however, if using a non-PenFed ATM, the ATM’s owner may charge you a surcharge fee.
  • Overdraft fee: $30

Unfortunately, this checking account does charge a monthly fee, but if you have a job with a direct deposit paycheck or at least a little bit of cash, it’s not a hard fee to skirt around.

What we really like about this account is that it charges zero ATM fees, except for any surcharge fees an out-of-network ATM owner would charge (but that’s out of PenFed’s control). If you’re looking for a high-interest-earning checking account and use the ATM a lot to get cash, this would be a great checking account for you.

How to get PenFed’s checking account

To get a PenFed Checking Account, you’ll need to be a member. Simply complete the application, deposit a Share savings account with at least $5 and join either the Voices For America’s Troops or National Military Family Association for a one-time $17 fee (if you don’t qualify based on your employment).

Once your application is complete, or if you’re already a member, you can open any new financial product directly in your online account. They will mail you a signature form, however you can still open new accounts before completing this final check mark.

LEARN MORE

How PenFed’s checking account compares

We really love PenFed’s checking account for several reasons. It has a great interest rate, especially considering that many banks still don’t pay anything at all. PenFed Credit Union also does not charge any ATM fees with this account (although again, the other bank’s owner may charge you a surcharge fee), making this a cheaper option for folks who frequently use cash.

While this is a great checking account, it is possible to find better online checking accounts out there that offer higher interest rates, no monthly fees and ATM surcharge fee reimbursements.

PenFed Money Market Savings Account

PenFed offers very low rates for this account, even with a high balance amount—you can do much better elsewhere.

APY

Account Balance

0.05%

Up to $9,999.99

0.10%

$10,000 - $99,999.99

0.15%

Over $100,000

  • Minimum opening deposit: $25
  • Monthly account maintenance fee: None
  • ATM fee: $1.50 for a withdrawal and $1.00 for a balance inquiry (including at in-network PenFed ATMs).
  • ATM fee refund: None
  • Overdraft fee: $30
  • Excessive transaction fee: $10 if you exceed 6 certain transactions per month.

PenFed’s money market account is designed to earn higher rates than their regular savings account, and that’s exactly what this account does — but only if you bring at least $10,000 of cash to the table to earn the second-tier or third-tier interest rates.

Although this account doesn’t have a monthly account maintenance fee, there are other fees to watch out for. You don’t typically use ATMs with a money market account as with a checking account, but if you do need to use an ATM, you’ll pay a $1.50 fee to make a withdrawal, even at an in-network PenFed ATM.

A better way to get your cash out of this account is with an account transfer (just don’t make over six in one month to avoid the excessive transaction fee), or with the free checks that they offer with this account.

How to get PenFed’s Money Market Savings Account

To get a PenFed Money Market savings account, you’ll need to be a member of the credit union. Joining is easy and only takes a few minutes. You may be eligible for membership based on your employer (such as the military) or by joining the Voices For America’s Troops or National Military Family Association for a one-time $17 fee.

As a part of the application process you’ll need to deposit at least $5 into a Share savings account. Once this is done, you can open up your Money Market savings account with a minimum deposit of at least $25.

They will mail you a signature form to complete your account application, however you can still open new accounts online before completing this final check mark.

LEARN MORE

NCUA Insured

How PenFed’s money market account compares

As far as interest rates go, PenFed’s money market account is very low. In fact, you can earn even higher interest rates by keeping your money in PenFed’s checking account, which is strange.

Furthermore, we find it odd that they charge you to make an ATM withdrawal from this account — even from their own ATMs. At least they offer free checks, but that won’t help you much if you need cold, hard cash pronto.

If you’re looking for better rates and terms on a money market account, you can find better money market accounts elsewhere.

PenFed Savings Account

An overall lackluster savings account that offers a low rate and charges for ATM withdrawals.

APY

Minimum Balance Amount

0.05%

$5

  • Minimum opening deposit: $5
  • Monthly account maintenance fee: None
  • ATM fee: $1.50 for a withdrawal and $1.00 for a balance inquiry (including at in-network PenFed ATMs).
  • ATM fee refund: None.
  • Overdraft fee: $30
  • Excessive transaction fee: $10 if you exceed six certain transactions per month.

This is the basic account that you need to become a PenFed member and open any other account. It’s designed as a free savings account and does pay a small amount of interest, but don’t expect much more from it than that.

Furthermore, if you ever need to take out cash from this account, you’ll pay a $1.50 per ATM withdrawal, even if you use a PenFed ATM. And unlike with their money market checking account, you don’t get free checks with this account. That means the only way you can make a free transaction into or out of this account is either online or by visiting a branch in-person.

How to Get PenFed’s Savings Account

To get a PenFed savings account, you’ll need to be a member of the credit union. Joining is easy and only takes a few minutes. You may be eligible for membership based on your employer (such as the military) or by joining the Voices For America’s Troops or National Military Family Association for a one-time $17 fee.

As a part of the application process you’ll need to deposit at least $5 into a Share savings account. Once this is done, you can open up your savings account with a minimum deposit of at least $5.

The credit union will mail you a signature form to complete your account application, however you can still open new accounts online before completing this final check mark.

LEARN MORE

NCUA Insured

How PenFed’s Savings Account compares

We’ll be honest here. The interest rate on PenFed’s savings account is awfully low compared with its competitors. You likely won’t earn much with this account, especially compared with other online high-interest savings accounts.

Furthermore, we don’t like the fact that you need to pay to use an ATM with this account, even for in-network PenFed ATMs. Most banks at least let you use their own in-network ATMs for free, so the fact that you need to pay to do so with this account seems silly.

However, even though all members are required to open this account when establishing their membership with PenFed, it doesn’t mean you have to use it. It’s perfectly fine to let it sit idle with the $5 minimum deposit since there are no monthly account maintenance fees. We instead view this account as a pesky requirement for working with the credit union if you’d like to use one of their other financial products.

PenFed IRA CD accounts

No fees on partial withdrawals for those ages 59 ½ and over make this a great account choice for mature consumers.

Term

APY

1 year

1.82%

2 years

1.97%

3 years

2.02%

4 years

2.12%

5 years

2.38%

7 years

2.43%

  • Minimum amount to open an account:$1,000
  • Minimum amount to earn APY:$1,000
  • Early withdrawal penalty: If you withdraw the money in the first year, you’ll forfeit all dividends earned. If you withdraw the money after one year but before the CD matures, you’ll pay 30% of what you would have earned if you kept the CD to maturity.

At first glance, PenFed’s IRA CDs look pretty run-of-the-mill. The minimum opening deposit is fairly high, especially if you’re a young saver just looking to start out. In fact, IRA CDs are fairly conservative investments anyway, and the people who can get the most benefits from them are mature folks nearing — or already at — retirement.

But what makes these IRA CDs really stand out as better options for more mature savers is that you can make partial early withdrawals from your CD completely penalty-free, assuming that you’re 59 ½ and over. If you need to take out the cash in retirement early, rest assured it won’t cost you anything to withdraw, as long as you leave at least $1,000 in the CD for it to stay open.

How to get a PenFed IRA CD

To get a PenFed IRA CD, you’ll need to be a member of the credit union. Joining is easy and only takes a few minutes. You may be eligible for membership based on your employer (such as the military) or by joining the Voices For America’s Troops or National Military Family Association for a one-time $17 fee.

As a part of the application process you’ll need to deposit at least $5 into a Share savings account. Once this is done, you can open up your IRA CD with a minimum deposit of at least $1,000.

They will mail you a signature form to complete your account application, however you can still open new accounts online before completing this final check mark.

LEARN MORE

NCUA Insured

How PenFed’s IRA CDs compare

While PenFed doesn’t exactly offer the highest interest rates on their IRA CDs, they’re pretty darn close. If you’re looking to get as high in returns as possible it’s tough to go wrong with them, but you may be able to earn more with other IRA CDs.

The thing that stands out the most with PenFed’s IRA CDs is that people who are over age 59 ½ can make partial withdrawals from these CDs without paying any early withdrawal penalties (assuming they keep at least a $1,000 balance in the CD to keep it open). This is a really unique feature, and it’s why we would recommend PenFed’s IRA CDs to older adults looking to keep their options flexible.

PenFed IRA Savings account

Low interest rates make this an OK place to store your retirement funds, but not to grow them.

APY

Minimum Balance Amount

0.05%

$25

  • Minimum opening deposit: $25
  • Monthly account maintenance fee: None

Remember how everyone is required to open up a PenFed savings account and fund it with at least $5 if they want to become a member? This account is the IRA version of that. Specifically, if you want to open up an IRA product — such as one of PenFed’s IRA CDs — you’ll need to open up one of these accounts as well.

This will be the default account that your IRA CD money is deposited into if you elect not to have the IRA CD auto-renew when it matures. It’s a great place to store your money in the short term until you withdraw it for retirement or move it to another IRA investment, however, it’s not a great place to grow your money due to the lackluster interest rate.

How to get PenFed’s IRA Savings account

To get a PenFed IRA savings account, you’ll need to be a member of the credit union. Joining is easy and only takes a few minutes. You may be eligible for membership based on your employer (such as the military) or by joining the Voices For America’s Troops or National Military Family Association for a one-time $17 fee.

As a part of the application process you’ll need to deposit at least $5 into a Share savings account. Once this is done, you can open up your IRA savings account with a minimum deposit of at least $25.

They will mail you a signature form to complete your account application, however you can still open new accounts online before completing this final check mark.

LEARN MORE

NCUA Insured

PenFed IRA Premier Account

The exact same account as PenFed’s regular IRA Savings account, just with a higher minimum balance requirement.

APY

Minimum Balance Amount

0.05%

$10,000

  • Minimum opening deposit: $10,000
  • Monthly account maintenance fee: None

If you have at least $10,000 to keep in your retirement savings account, you can choose to open PenFed’s Premier IRA Savings account. There is no real benefit of using this account over PenFed’s regular IRA Savings account, because the exact interest rates are currently being offered for both accounts.

Typically, the more money you bring to the table, the higher the interest rate you can earn (as with PenFed’s Money Market Savings account), however that is not the case with this account. That could change in the future, however, if the credit union does decide to increase their interest rates for this account. But right now, we can’t really see any reason why you’d specifically choose this account over their regular IRA Savings account.

How to get PenFed’s IRA Premier account

To get a PenFed IRA Premier account, you’ll need to be a member of the credit union. Joining is easy and only takes a few minutes. You may be eligible for membership based on your employer (such as the military) or by joining the Voices For America’s Troops or National Military Family Association for a one-time $17 fee.

As a part of the application process you’ll need to deposit at least $5 into a Share savings account. Once this is done, you can open up your IRA Premier account with a minimum deposit of at least $10,000.

The credit union will mail you a signature form to complete your account application, however you can still open new accounts online before completing this final check mark.

LEARN MORE

NCUA Insured

Overall review of PenFed’s banking products

When it comes to bank accounts, PenFed really shines in some areas and offers somewhat lackluster products in others. Specifically, we really like the high rates offered on their checking accounts and CD products, which are currently running near the top of the pack. The added advantage for people who are over age 59 ½ to withdraw money from the IRA CDs without paying a penalty as long as they keep at least $1,000 in the CD is also a great option.

However, other products — such as their savings and money market accounts — fall a bit short. We find it odd that they charge ATM fees for some of their accounts, even if you use a bona fide PenFed network ATM. Furthermore, each of PenFed’s savings accounts offers such low rates that we can’t really recommend them as a place to grow your money.

The post PenFed Credit Union CD Rates, Checking, Savings, Money Market, and IRA Accounts appeared first on MagnifyMoney.