We've researched both banks and credit unions to find out which ones are up to the needs of a military lifestyle: fast paycheck processing, reliable ATM access and a culture of outstanding customer service.
Best for Active Duty Servicemembers: USAA
USAA's superior customer service is the best option for handling the financial challenges that come with getting deployed. Whether you need a place to deposit your pay or find better rates on loans and insurance, USAA backs up its wide variety of products with an outstanding level of personalized care. The bank has consistently earned recognition from research groups like Fortune, Forrester Research and Satmetrix in categories such as customer experience and loyalty.
A quick glance at the bank's unique features also shows that its products are designed to help customers who are on active duty. When you set up direct deposits for your military paycheck, USAA will make those funds available at least one business day earlier than the actual payday. If you're overseas and need to use an ATM, USAA customers get up to 10 free withdrawals per month, along with $15 in monthly rebates to cover ATM fees charged by other banks. Finally, the USAA app allows you to send up to $1,000 a day to anyone with a phone number or email address.
However, you won't find strong interest rates on a USAA checking or savings account. Rates at this bank fall between 0.01% APY on $1,000 or more in Classic Checking and 0.2% APY for $50,000 in Performance First® Savings. That's far lower than the rates you can find on an online savings account. If you want your savings to earn more, we suggest adding an extra savings or investment option outside of USAA to complement the bank's many other benefits.
Best Military Credit Union: Navy Federal Credit Union
If you want to access military-exclusive financial services, Navy Federal is a huge credit union that combines the advantage of a big bank with the high rates and low fees that only credit unions offer. Despite the name, membership at Navy Federal is open to all branches of service and also includes retirees and veterans.
Compared to USAA, Navy Federal tends to offer more generous loan terms and better access to physical bank locations. You'll need a much higher credit rating in order to access the same financing options at USAA, so if you're not sure of your credit, it may be better to start at Navy Federal. Of course, it's typically harder to join a credit union than it is to join a bank, but if you're already a member of the military then this shouldn't be an issue with Navy Federal. It's always difficult to put a number on customer service quality, but both USAA and Navy Federal have excellent reputations in that area.
Navy Federal also gives members better rates on deposit accounts. You earn 0.01% to 0.45% APY with checking accounts and 0.25% APY with any amount in your Share Savings Account. For long-term saving, Navy Federal certificates of deposit beat most banks in the short term, with 0.6% APY on a 24-month CD and 0.6% for 12-month terms. Finally, Navy Federal offers preferential rates on mortgages and auto loans, with excellent service to back them up. If USAA doesn't provide the interest rates you need, we recommend Navy Federal as a great alternative.
Best for Military Families: Pentagon Federal Credit Union
Pentagon Federal isn't the strongest option for checking or savings accounts, but it offers excellent choices for earning credit card rewards if you live and work at a base in the States. PenFed offers 2% cash back for military members through PenFed Power Cash Rewards Visa. Both USAA and Navy Federal offer 1.5% cash back cards, but neither can currently match PenFed's military-only 2% bonus.
Families with particularly strong credit might consider upgrading to the PenFed Platinum Rewards VISA Signature Card, which offers the highest cashback on groceries and gas purchases. You earn 5% at the gas pump and 3% on supermarket purchases, making PenFed the best value for military families interested in earning credit card rewards on their day-to-day spending. This also applies to commissaries on base, and gas stations on and off base. With no annual fee and 24/7 concierge service, this card delivers a very cost-effective package of benefits even when compared against premium cards at companies like American Express and Chase.
PenFed only offers one type of checking account, but the 0.35% APY you can earn with PenFed AccessAmerica Checking is higher than most other military banking choices. That rate goes up to 0.35% APY on daily balances of $20,000 or more, which compares extremely well with brick-and-mortar checking accounts in the US as a whole. Waiving monthly fees requires slightly higher minimums at PenFed, so we recommend starting your search at Navy Federal if your average balance is unpredictable.
Best for Premium Bank Services: Chase Bank
Chase is a good choice for veterans and service members who want free access to extra brick-and-mortar features. The Chase Military Banking Benefits program that waives all monthly fees on the bank's premium checking account. This means you get complimentary access to free safe deposit boxes, money orders and cashier's checks.
The Chase Premier Plus Checking account normally costs $25 a month and requires $15,000 in the bank to waive this fee. In addition to the standard benefits on this account, active-duty and reserve service members who arrange direct deposit will receive waivers on all non-Chase ATM transactions, free wire transfers and no foreign exchange fee on debit purchases and withdrawals in other currencies. This makes Chase an acceptable choice even if your deployment takes you abroad.
Unfortunately, Chase's status as a non-military bank means that you won't be able to get early payment deposits, like you can at USAA or other military-specific institutions. You may want to consider Chase over other banks if you plan on opening any Chase credit cards, which give you access to one of the best rewards programs in the industry. The excellent Chase mobile banking app allows users to manage all active Chase accounts in a single glance, making it easy to transfer payment from checking account to credit card balance.
Summary of the Best Military Banks and Credit Unions
The table below gives a point-by-point comparison of the military banks and credit unions we reviewed. While the majority of service members should find a good fit at one of these places, it's helpful to keep the following fees and features in mind if you want to evaluate a bank or credit union we haven't covered.
|Active Duty||USAA||$0||Early payday deposit and reputation for excellent service|
|Credit Union||Navy Federal||$0||Friendly rates on home and auto loans|
|US-Based Families||PenFed||$10||High checking APY and credit card rewards|
|Premium Bank Services||Chase Bank||$0||Three accounts with online management features|
Finding the Best Bank for You
While you'll probably find that most people recommend USAA, Navy Federal or PenFed as the best choice for military banking, the answer will often depend on your individual situation. Many service members end up opening accounts at all of these institutions, since fees are generally low or easily waived. For example, you might find that you prefer to keep your checking account at USAA, but apply for a car loan at Navy Federal or a credit card at PenFed.
Looking through the individual terms on each financial product may be time consuming, but it's often necessary to getting the best deal. While it's often easier to keep all your accounts at one bank or credit union, making the extra effort to explore other options can net you long-term advantages. Non-military options are also possible, especially online: banks that don't operate any branches tend to offer much stronger interest rates. If you're dissatisfied with deposit interest rates at military banks, try searching for online savings accounts.