PenFed's savings account options and where to find higher rates
PenFed Credit Union does not offer a dedicated high yield savings account. They offer a regular savings account with a rate that changes based on your balance and membership tier, but it typically sits well below what you can find at online banks and other credit unions. If you are a PenFed member looking for higher interest on savings, you will need to look elsewhere or use PenFed for other banking needs while keeping your savings money in a separate account.
PenFed's savings account rate varies by how much you have on deposit and whether you are a regular member or a premium member (which requires a higher minimum balance). The rate is not competitive with accounts marketed as high yield, which currently range from 4% to 5.35% APY depending on the bank. PenFed's rate is typically under 1% APY, though the exact figure changes monthly.
Key Takeaways
- PenFed's regular savings account does not compete with high yield savings accounts offered by online banks and other credit unions.
- PenFed's savings rate is tiered by balance and membership level, but typically remains below 1% APY.
- If you want higher interest on savings, you will need to move money to a separate institution while keeping your checking or other accounts at PenFed.
- PenFed membership itself requires either military affiliation, employment with certain organizations, or a one-time donation to an armed forces charity.
How PenFed's savings account rate is structured
PenFed uses a tiered rate system, meaning the interest rate you earn depends on your account balance. The more money you keep in the account, the higher the rate—but even the highest tier is still below what high yield accounts offer. The exact rates are not published on their website; you have to log in or call to see what you would earn.
PenFed also offers a premium membership tier that requires a higher minimum balance (usually $25,000 or more) and comes with additional perks like waived fees. Premium members may earn a slightly higher savings rate, but the difference is marginal and still does not approach high yield territory.
Where to find higher rates if you are a PenFed member
Online banks like Marcus, Ally, and Capital One 360 currently offer savings rates between 4% and 5.35% APY with no membership requirements and no minimum balance. Credit unions like Connexus and Pentagon Federal Credit Union (a different institution from PenFed) also offer competitive rates. You can keep your PenFed checking account or other services and move only your savings to whichever account offers the rate you want.
The difference adds up quickly. On $10,000, earning 0.5% at PenFed versus 4.5% at an online bank means you would earn roughly $400 more per year at the higher-rate account. That gap widens as your balance grows.
PenFed membership requirements and what accounts you can open
You must meet PenFed's membership requirements before you can open any account with them. Membership is open to military members and veterans, federal employees, employees of certain organizations, and anyone who makes a one-time $25 donation to an armed forces charity. Once you are a member, you can open a savings account, checking account, money market account, and certificates of deposit (CDs).
PenFed's money market account and CDs may offer slightly better rates than the savings account, but they still typically lag behind online banks. A money market account usually requires a higher minimum balance and may limit how often you can withdraw. CDs lock your money for a set term (ranging from a few months to several years) in exchange for a fixed rate.
When a PenFed savings account still makes sense
If you are already a PenFed member and use them for checking or other services, keeping a small savings account there for convenience is reasonable—just do not expect it to be your primary savings vehicle. Some people use PenFed for everyday banking and a separate online bank for savings, which is a practical split.
PenFed's rates may also shift over time as the Federal Reserve changes interest rates. If rates rise significantly, PenFed's savings rate may improve, though it is unlikely to ever match the best online banks because credit unions and banks compete differently on rates and fees.
How to compare PenFed against other savings options
When comparing accounts, look at the actual APY (annual percentage yield), not just the interest rate. APY accounts for how often interest is compounded. Check whether the account has a minimum balance requirement, monthly fees, or withdrawal limits. Some accounts charge a fee if you fall below a certain balance, which can wipe out months of interest earnings.
Use a rate comparison site like Bankrate or DepositAccounts to see current rates across multiple banks. These sites update daily and let you filter by account type, minimum balance, and other features. You can also call PenFed directly at 1-800-424-2989 to ask what rate you would earn on your specific balance before opening an account.
Frequently Asked Questions
Can I move money from PenFed to another bank's high yield savings account?
Yes. You can transfer money out of PenFed to any other bank using an ACH transfer (which takes one to three business days) or by writing a check. There is no penalty for moving your savings to a different institution. You can keep your PenFed checking account or other services active while moving only your savings elsewhere.
What is PenFed's current savings rate?
PenFed does not publish its savings rate on its website. You must log into your account or call 1-800-424-2989 to see the current rate for your balance tier. Rates change monthly and vary based on how much you have on deposit.
Does PenFed offer any account with a rate above 1%?
PenFed's CDs may offer rates closer to 1% to 2% depending on the term length, but these rates are still well below what online banks offer for savings accounts. A CD also locks your money for a fixed period, so you cannot access it without a penalty.
Is PenFed FDIC insured?
No. PenFed is a credit union, so deposits are insured by the National Credit Union Administration (NCUA) up to $250,000 per account type. NCUA insurance works the same way as FDIC insurance—your money is protected if the institution fails.
Can I open a PenFed account if I am not military?
Yes. You can open a PenFed account if you are a federal employee, work for certain organizations, or make a one-time $25 donation to an armed forces charity. Check PenFed's website or call to confirm whether your employer qualifies.