Credit unions offer great options for your banking needs, especially if you currently work for the government or have done so in the past. Typically smaller than big banks, government employee credit unions regularly offer excellent customer service, lower interest rates on loans, lower bank fees, and higher interest rates on checking and savings accounts. What's more, they offer many of the same products and services as the nation's largest banks.
Even if you aren't physically near any of the credit unions mentioned here, they might still serve your needs. Online banking makes managing your finances a breeze. Plus, when credit unions are part of a shared network, you can access your account from thousands of credit unions across the country by visiting the branch of another credit union to make deposits, withdrawals, get cashier's checks, and more. No matter which federally insured credit union you choose, your deposits are insured by the U.S. government for maximum protection.
You must meet specific criteria for membership before setting up an account. Fortunately, many credit unions have relaxed membership requirements in recent years. The financial institutions below are great options for employees of the federal government and the military, including family members. They've gotten excellent reviews from satisfied customers, and they offer competitive products.
Pentagon Federal Credit Union
Pentagon Federal Credit Union (PenFed) has extensive options for banking and lending, and the credit union offers some great online banking features, too. PenFed allows almost anyone to join. If you're a member of the military, a U.S. government employee, an employee at an eligible place of business, or belong to an organization such as the Veterans of Foreign Wars (VFW), you can join.
If you don't meet any of the above qualifying criteria, PenFed allows membership for those who belong to the National Military Family Association, which is available for a $17 annual fee to any U.S. citizen. You can join this organization when you open your PenFed account online.
Navy Federal Credit Union
Fortune magazine placed Navy Federal on its list of the 100 Best Companies to Work For. Membership at this government employee credit union is over 11 million and growing.
Navy Federal serves the Army, Marine Corps, Navy, Air Force, Coast Guard, Department of Defense, and veterans. To join, applicants must work for one of these organizations or be a family member of an eligible employee. While most credit unions extend memberships to immediate family only, Navy Federal allows siblings, grandparents, and grandchildren to become members.
If either of the above requirements fits your situation, take advantage of Navy Federal's great rates on everything from car loans to fixed interest credit cards. One extra perk of Navy Federal is 24/7 phone support. PenFed has generous customer service hours, but Navy Federal comes out ahead if you're a night owl.
Opening a Credit Union Account
To open an account at a credit union, you'll need to qualify as a member—as described above. In some cases, that's as easy as donating to an organization associated with the credit union. When you become a member of the organization by donating, you become eligible to become a credit union member as well.
Next, you'll need to provide basic information about yourself, such as your Social Security number, physical address, and a valid government identification document.
Finally, you'll open a "share" account, which officially makes you a member. In many cases, this means you have to maintain a minimum deposit balance between $5 and $20, which the credit union will set aside for the duration of your membership.
Banks for Federal Employees
Although both types of institutions offer similar products and services, credit unions aren't always better than banks. Shop around to make sure you get the right fit for your needs. Some banks charge fees for having an account, and most will accept anybody as a customer, though there are exceptions.
For some government employees, USAA Bank is a good option. It's popular among military families, and the bank consistently gets good reviews for customer service and competitive rates. Joining USAA Bank requires that you are active military, former military, cadets or midshipmen, or family of those individuals.
Frequently Asked Questions (FAQs)
What is a credit union?
A credit union is a not-for-profit financial institution that offers financial services such as checking and savings accounts, auto loans, and mortgages. Although it's similar to a bank, a credit union is owned by its members (the account holders) rather than by investors, so all financial returns come back to the members in the form of lower loan rates and higher yields. Membership in a credit union is typically restricted to members of the specific community or group that it serves.
Who insures credit unions?
Unlike banks, which are insured by the Federal Deposit Insurance Corporation (FDIC), credit unions are insured by the National Credit Union Share Insurance Fund (NCUSIF) under the supervision of the National Credit Union Administration (NCUA). As long as you have funds in a credit union that's insured by the NCUSIF, your shares are protected up to $250,000 per depositor.