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By Leslie Cook
October 26, 2020
Janice Chang for Money

Finding a great credit union isn’t as easy as signing up with a brand-name bank. But the advantages — including lower fees and higher interest rates — mean the extra work is often well worth it.

Money

Both credit unions and traditional banks offer savings and checking accounts, credit cards, ATMs, and personal loans. The big difference is that credit unions are not-for-profit financial institutions. By becoming a member of a credit union, you become more than just a customer – you become a part-owner.

To pick the Best Credit Union for 2020, we took the top 50 credit unions by deposits, then looked at membership requirements, screening out those that are difficult or impossible for most Americans to join, such as ones open only to members of a trade union or residents of a particular state. We then focused on interest rates and the fees for each credit union’s flagship account. Finally, we also considered the size of branch and ATM networks.

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Best Credit Union: Pentagon Federal Credit Union

Why it wins: PenFed is one of the easiest credit unions to join, all it takes is opening a savings account with a $5 deposit. Members enjoy generous interest rates on both checking and savings accounts, low or easily waivable fees, and a large ATM network.

The Premium Online Savings account, which you can open online or at a branch, pays 0.6% interest on balances over $5, with no monthly service fee and free transfers to other PenFed accounts.

PenFed’s Easy Access checking account (which requires $25 open) pays a 0.2% interest rate on balances up to $19,999, and 0.4% on balances above that threshold, up to $50,000. There is a $10 monthly service fee on the checking account. But it can be waived by either maintaining a $500 minimum monthly balance or making one $500 direct deposit per month.

Of all the credit unions we looked at, Penfed had the largest number of proprietary branches (46) spread out across the largest number of states (13). It also has the largest ATM network, consisting of 85,000 ATMs across the country (including ATMs in the Allpoint and Co-op networks). There are no fees for out-of-network ATM transactions, although you may be charged a fee by the ATM owner.

Caveat: It’s not hard to find other credit unions with higher initial interest rates on checking and savings accounts. However, these rates tend to drop significantly as the account balance goes up, whereas PenFed’s rates increase with higher balances. You should evaluate which credit union offers the best rate for the account balance you’re likely to maintain.

Penfed also doesn’t offer an ATM card if you only open a Premium Online savings account, you’ll need to open a regular saving or checking account if that’s important to you.

Runners Up:

Alliant Credit Union: Alliant offers a 0.25% interest rate on its High Interest Checking account and 0.65% on its High Rate Savings account, both of which are higher than the interest rate offered by most credit unions. There are some hurdles however: For the checking account, you need to make at least one monthly electronic deposit. For the savings account, you need to keep a minimum daily balance of $100.

Alliant members also have fee-free access to over 80,000 ATMs, including all ATMs in the Presto network. Alliant doesn’t charge monthly service fees on either of the two accounts we looked at and allows you to do either online or mobile banking.

First Tech Federal Credit Union: With First Tech, you’ll get an eye-popping 5% interest rate on the first $999.99 on the Start-Up Savings account, but the rate drops down to 0.10% on higher balances. Still, it’s one of the highest initial interest rates among the credit unions we looked at.

First Tech also pays a generous interest rate on its Dividends Rewards Checking account – 1.25% – as long as you meet the account requirements of 12 debit card purchases and one direct deposit or ACH deposit or withdrawal per statement cycle.

While most of First Tech’s 40 branches are located in Oregon, you’ll also have access to 5,600 shared CO-OP Network branches nationwide, and over 30,000 fee-free ATMs.

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To produce this year’s Best Credit Union rankings, Money reviewed account information for over 40 of the biggest credit unions in the country in terms of deposits. The account information included membership requirements, account minimums and qualifications, interest rates, monthly service fees, ATM fees, overdraft fees, overdraft protection fees, insufficient funds fees, debit card replacement fees, domestic wire transfer fees, and online banking capabilities. When selecting finalists, priority was given to checking and savings accounts with no or easily waived monthly fees, free ATMs, and higher interest rates. In naming free accounts, we assumed customers would be okay with receiving e-statements to avoid a monthly fee. Money’s editorial team fact-checked the information in October.

More from MONEY:

Money’s Best Banks: Why Capital One Is Our Pick for Best National Bank

Money’s Best Banks: Why Ally Is Our Pick for Best Online Bank

Money’s Best Banks: Why Ally Is Our Pick for Best CD

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Advertiser Disclosure

The purpose of this disclosure is to explain how we make money without charging you for our content.

Our mission is to help people at any stage of life make smart financial decisions through research, reporting, reviews, recommendations, and tools.

Earning your trust is essential to our success, and we believe transparency is critical to creating that trust. To that end, you should know that many or all of the companies featured here are partners who advertise with us.

Our content is free because our partners pay us a referral fee if you click on links or call any of the phone numbers on our site. If you choose to interact with the content on our site, we will likely receive compensation. If you don't, we will not be compensated. Ultimately the choice is yours.

Opinions are our own and our editors and staff writers are instructed to maintain editorial integrity, but compensation along with in-depth research will determine where, how, and in what order they appear on the page.

To find out more about our editorial process and how we make money, click here.

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