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PenFed Credit Union vs. Navy Federal: Which is Right For You? | Banking Advice

Key Takeaways

  • PenFed and Navy Federal are credit unions that show their appreciation to those with a military affiliation by offering strong benefits.
  • Navy Federal Credit Union is only open to those associated with the military; whereas, PenFed Credit Union is open to everyone.
  • Compare factors when choosing between the two credit unions, like branch locations, fees, customer service and special services for military members.

Anyone with a military affiliation should consider looking into the benefits of military banks. These financial institutions, which are usually credit unions, offer benefits and exclusive deals for their members, says Pavlo Buryi, Ph.D., an associate professor of economics at Harrisburg University of Science and Technology. “For instance, a veteran or an active duty military member may get a higher interest rate on their deposits or would get better terms for a personal loan,” he says.

Among the most well-known military banks are Navy Federal Credit Union and PenFed Credit Union. In fact, Navy Federal is the nation’s largest credit union, while PenFed is the third-largest. “Military credit unions represent values that are important to the military and engage in their communities in meaningful ways,” says Buryi.

Read more to learn about Navy Federal and PenFed and how these two institutions compare.

All About Navy Federal Credit Union

Navy Federal Credit Union’s eligibility requirements are not open to all. In order to join, you must be a veteran, retired service member, active-duty in any branch of the armed forces or a Department of Defense civilian worker. You can also join without being in the military at all; for example, you’re eligible to join if someone within your immediate family or household currently banks at Navy Federal.

If you can qualify, you’ll join more than 13 million members, have access to 350 branch locations worldwide, and can utilize a full suite of financial services, including checking, savings, loans and credit cards. Navy Federal offers benefits specifically geared toward military members, including an array of dedicated experts in VA mortgage loans and servicing and early direct deposit payments for those who are active duty. It also has an app that’s popular and used by almost three-quarters of its members.

All About PenFed Credit Union

Pentagon Federal Credit Union is the third-largest federal credit union in the nation. Unlike Navy Federal Credit Union, membership is open to anyone, making it more accessible. PenFed offers numerous banking products including checking, savings, loans, mortgages and other accounts to its almost 3 million members. Members also gain access to various discount programs from partner organizations, but there are fewer benefits that are specifically intended for military members.

However, the credit union is still military friendly, especially via its PenFed Foundation which has provided financial support to more than 140,000 military families since 2001. It also has a Veteran Entrepreneur Investment Program to help veteran business owners.

Comparing the Numbers

Navy Federal PenFed
Credit union size #1 in the nation. #3 in the nation.
Number of members 13 million members. 2.9 million members.
Established 1933. 1935.
Number of branches 350 branches worldwide. 46 branches nationwide.
Eligibility Veterans, retired servicemembers and active duty in all branches of the armed forces; DoD civilian personnel; immediate family and household members –including roommates – of current Navy Federal members. Open to everyone.
Checking accounts Five account options. Two account options.
Savings Higher APY on certificates of deposit. Higher APY on savings.

Which Credit Union Is Right for You?

For Military Benefits and In-Person Banking: Navy Federal Credit Union

If you value the experience of in-person banking and also want to receive benefits for being affiliated with the military, then you should choose Navy Federal Credit Union. For starters, you can open a Free Active Duty Checking account that allows you to access your military pay one day earlier and provides ATM rebates, which can come in handy if you’re deployed. Active duty and retired military members can also get an annual percentage rate discount on some loan products.

The fact that Navy Federal has more branches might make it a better fit than PenFed if you like having the option of in-person banking. “If you’re the kind of person who prefers – even enjoys – the interaction with a live person, then the old-school bank may be right for you,” says Angelo DeCandia, professor of business at Touro University.

For Open Membership and Savings: PenFed Credit Union

If you’re looking for a military credit union that is open for all and offers great savings, then PenFed Credit Union might be your best choice. PenFed doesn’t require any military affiliation in order to join so you won’t be turned away if that doesn’t apply to you.

Because there are fewer branches, you can expect more of a digital banking experience with PenFed. “If you conduct your whole life online, then you probably don’t have the time nor patience to go down to a brick-and-mortar bank with all that entails anyway,” says Buryi.

Factors to Consider When Choosing a Bank

Choosing a financial institution is easy, as long as you take the time to ask the right questions, says DeCandia. “First and foremost, figure out what is most important to you when banking and envision how you will be using the bank to accomplish your financial goals,” he says.

Credit unions that are geared toward military members are generally not-for-profit and able to offer lower rates on loans and higher rates on savings, says DeCandia.

Some key features to compare when choosing the right bank for you:

  • Branch availability. Though most banking can be done online, there are other services that only physical locations offer, such as safety deposit box rentals, cashiers checks and foreign currency exchanges, says Buryi. “Having an option to stop by your local branch is always beneficial,” he adds. 
  • Interest rates. If you have a large amount of savings, you should probably put high interest rates at the top of your priority list, says DeCandia. See if there is a high-yield savings account or competitive rates on CDs. On the flipside, if you’re interested in borrowing, see if loan interest rates are lower than average.
  • Account fees and minimum requirements. Some bank accounts require that you maintain a minimum balance to avoid a monthly fee or to earn interest. If you’re living paycheck to paycheck, then you probably want to find banks that offer no fees or no– or low– minimum balance requirements.
  • Digital tools and customer service. See if the bank or credit union you’re considering has an app and check out the reviews online. Also, look for features like online bill pay, mobile check deposit and customer support chats. Especially if you’re not banking in person, you want to know that you can reach out for support in other ways.
  • Specialized services for military members. Military banks or credit unions will usually have banking professionals who are experts in certain loan programs or military discounts like VA loans. “Active service members must consider the possibility of redeployment and how that would affect their banking needs. If sent to a foreign country, would their bank still be accessible for most banking functions, such as writing checks, making deposits and any of the more common functions that the civilian population takes for granted?” says DeCandia. “For veterans, focus more on the accessibility of low-interest loans on everything from mortgages to starting a business.”

Beyond Military Banks

There is a reason that both Navy Federal Credit Union and PenFed Credit Union are among the top three credit unions in the nation: They each have strong benefits for their members.

That said, just because you qualify for a military bank or credit union membership doesn’t necessarily mean it’s the best choice for you. Plus, there isn’t a rule that says you have to do all of your banking in one place. You can take advantage of great savings rates with one bank and free checking with another.

If you do have military or veteran status, you should explore banks that are willing to offer more favorable terms as a demonstration of appreciation for military service, says DeCandia. But more than that, you want to be sure that the banking institution you choose is best suited to help you accomplish your financial goals.

Sarah Goldberg
Sarah Goldberg

Sarah is a seasoned financial market expert with a decade of experience. She's known for her analytical skills, attention to detail, and ability to communicate complex financial concepts. She holds a Bachelor's degree in Finance, is a licensed financial advisor, and enjoys reading and traveling in her free time.

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