PenFed Credit Union (PenFed) used to offer very competitive CD rates. My last post was in early 2019 when its 5-year CD yield was over 3%. Unfortunately, PenFed’s CD rates have been uncompetitive for some time, with rates much lower than what online banks are offering. However, there is another reason for me to write about PenFed. The Credit Union is offering a new checking account promotion in which you can earn a $200 bonus. I think most of us would prefer a CD special, but at least this offers many of us a way to make a little bit of money.
PenFed is offering a $200 bonus when you open a new Access America Checking Account, deposit a minimum of $1,200, and make 5 debit card purchases within 90 days of account opening. The offer is valid through 6/14/2020. Here’s the link to the PenFed promotion page.
Below is an excerpt of the promotion’s small print:
Must receive at least $1200 in deposits in your checking account within 90 days of account opening and make 5 debit card purchases in the first 90 days. Only available to new personal checking members who do not have an existing checking account and qualify for an Access America Account. Once the criteria is met, the bonus will be credited to the new personal checking account no later than 120 days from account opening. Account must remain open, active and in good standing (no negative balance) at time bonus is distributed. PenFed will issue an IRS form 1099 reporting the value of the bonus. One bonus per member.
The $1,200 deposit requirement matches the stimulus checks that the government has sent to qualified Americans as part of the $2 trillion COVID-19 relief package. There’s no requirement that the deposit be from this stimulus check. So if you didn’t qualify for the stimulus check, you can still qualify for this bonus. Another nice thing about this promotion is that it does not require direct deposit which makes sense for an institution that wants to help those who may no longer be receiving direct deposits from employers. Hopefully, we’ll see more checking account bonuses like this from other banks and credit unions.
Thanks to DA reader, SYC, for posting news of this promotion in the DA Forum.
Access America Checking Features
The first thing to note about the Access America Checking Account is that it’s not a free checking account. There’s a monthly service charge of $10. This can be waived with either a daily balance of at least $500 or a monthly direct deposit of at least $500.
One benefit for PenFed members to have this checking account is that it gives members free access to ATMs in the Allpoint and CO-OP network. PenFed members who don’t have Access America Checking are charged $1.50 for making withdrawals from in-network ATMs.
The first box of checks is free. For additional checks, PenFed charges $5 for each order of checks.
For more details on the checking account fees, please refer to this PenFed Service Fees page.
Checking and Savings Interest Rates
Access America Checking does pay interest if you maintain a monthly direct deposit of at least $500. As is common with interest checking accounts, the rates are low. Currently, the rate is 0.50% for balances between $20k to $50k. Balances under $20k earn 0.20%. These rates have been steady since 2016. To be fair, this is comparable to the current rates of Ally Bank Interest Checking (0.50% for $15k+, 0.10% under $15k).
PenFed does have an option now for earning a decent rate on a liquid account without direct deposit. PenFed launched an online savings account in 2018. It’s called the Premium Online Savings Account. During most of 2019, the yield had been 2%, but it has been falling since last September. However, the yield has remained competitive with the online banks. As of May 6, 2020, the yield of the Premium Online Savings Account is 1.40% on all balances. Minimum to open is only $5. In the past, the account only paid interest on a maximum balance of $100k. That is no longer the case, and now all balances earn the full interest rate.
Future of PenFed CDs?
Many DA readers may only have PenFed CDs (called Money Market Certificates by PenFed) in addition to the required savings account. So many readers may be eligible to participate in this promotion. I think most would prefer a competitive CD special, but at least this offers us a way to make a little money.
PenFed has a long history of competitive CD rates. Many readers are probably still earning 5% yield on promotional 10-year CDs that PenFed offered in late 2010 and early 2011. Unfortunately, those CDs will soon be maturing. Another great CD deal at PenFed came in 2013 and early 2014 when PenFed offered 5-year and 7-year CDs with a 3.04% APY. That was the time during the last zero rate period when the top 5-year CD yields from online banks were only around 2%. So I still have hope that we’ll see good CD deals again at PenFed.
Here’s an interesting bit of PenFed CD history that gives me hope. PenFed’s current 5-year CD yield (1.25%) is close to its all-time low (1.15%). That all-time low occurred in 2013. In May 2013, PenFed’s 5-year CD yield fell to 1.15%, and it remained at this level until September 2013 when the yield increased to 1.56%. The yield increased to 2.02% in October, which positioned PenFed with the rate leaders. Two months later, we were pleasantly shocked by PenFed’s rate increases that pushed the 5-year CD yield to 3.04%, which was way above the rate leaders.
I doubt 2020 will be a repeat of 2013 for PenFed CD rates, but 2013 may give you hope and remind you not to give up on PenFed.
Headquartered just outside the Beltway in McLean, Virginia, PenFed Credit Union offers membership to almost every U.S. resident. PenFed’s online application lists the various ways in which individuals can qualify for membership.
- I am retired, honorably discharged, or currently serving in the military
- I work for the Federal Government or another eligible employer
- None of these options apply to me
If you choose the “None” option, the application lists three additional options:
- I am a member of an eligible association
- I live or work at an eligible location
- None of these options apply to me, but I would like to join PenFed
If you choose the “association” option, the application asks you to enter the eligible association in a text box. As you start to type, dozens of associations are listed for you to select.
If you choose the “None” option, the application still allows you to continue. In the past, the PenFed application would allow you to join an association as you applied for PenFed membership. This required you to pay $17 for membership into the association. It appears the new online application still offers this option, even though this option and its cost are no longer listed.
According to a member service representative, the application process for the Access America Checking Account does not result in a hard credit inquiry. I was told it’s only a soft credit pull with no effect on one’s credit score.
I was also told that you can fund the account with either a debit or credit card. Maximum initial deposit when using a card is $500. There isn’t a limit if you fund it electronically via ACH by entering the routing and account number information of your existing checking or savings account. Existing members can also fund it from their PenFed savings account.
Joining PenFed and/or opening the Access America Checking Account can be done online by clicking on the “open now” button in the PenFed promotion page.
Once the COVID-19 restrictions are eased, joining and opening accounts can be done in person at any of the 48 full-service branches located in California, the District of Columbia, Florida, Georgia , Hawaii, Kentucky, Maryland, North Carolina, Nebraska, New Mexico, New York, Pennsylvania, Tennessee, Texas, and Virginia.
Credit Union Overview
PenFed Credit Union has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 3.64% (excellent), based on December 31, 2019 data. In the past year, PenFed’s deposits have fallen by $930 million, or 4.93%. This is part of the reason why the overall health grade is “A” and not “A+”. The shrinking deposits may put pressure on PenFed to offer higher CD rates at some point in the future. Please refer to our financial overview of PenFed Credit Union (NCUA Charter # 227) for more details.
Established in 1935, PenFed Credit Union is the third largest credit union in the nation, with more than 2,700,000 member accounts and assets in excess of $24 billion.
How the Bonus Offer Compares
Checking account bonus amounts from $300 to $700 are available at a few large banks including Chase, Wells Fargo, Citi, PNC, and HSBC. The larger bonuses tend to either require maintaining large balances or establishing a large monthly direct deposit. With a deposit requirement of only $1,200, a minimum balance of $500 to avoid fees, and no direct deposit requirement, PenFed’s $200 bonus compares very favorably to the bonus offers from the other banks.
Other Bank Bonuses
Be sure to check out our full list of the best savings and checking account bonus offers.
The above offers and rates are accurate as of 5/6/2020.