Credit Card Offers: PenFed Reward Credit Cards
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Today is the first installment of a new, recurring feature on FCN where I’ll be highlighting various credit card offers and possibly other financial products (high interest savings accounts, high CD rates, etc.). These posts will go live on Saturday mornings in addition to all the weekday content that we provide.
As you’re likely aware, the credit card landscape tightened up during the recent economic crisis, and many of the best offers disappeared. In recent months, some fairly attractive offers have popped back up however.
I’m going to kick off this series by looking at a pair of reward credit cards from Pentagon Federal Credit Union (a.k.a., PenFed). I’ve talked about PenFed in the past in the context of their competitive CD rates as well as their mortgage refinance business.
What is PenFed?
For starters, we need to talk about PenFed… They’re a credit union that serves members of the armed forces, defense-related companies, the VFW, and the American Red Cross. As it turns out, however, anyone can join.
Membership privileges are actually extended to immediate family members and housemates of individuals in qualifying groups, and if you still don’t qualify, you can simply join the National Military Family Association (NMFA) for $20. There’s no need to maintain the NMFA membership in the future to remain a part of PenFed.
Note: as reader “RS” points out in the comments, PenFed requires you to open a Regular Share Account and maintain a minimum $5 balance maintained in order to remain a member (this is in addition to the $20 NMFA membership). You can fund the $5 via EFT, credit card, or check (with the check option allowing you to receive your account opening materials).
Details on all of this are available from the membership section of the PenFed website, or via links from their credit card applications. When we joined, we did it as members of the NMFA — which we joined for the sole purpose of gaining access to PenFed and their products.
PenFed Premium Travel Rewards American Express
The PenFed Travel Rewards AmEx card was highlighted as one of the best credit cards of 2009 by CardRatings.com. This card features 5 points per dollar spent on airfare, 3 points per dollar on hotels and dining (through the end of 2010), and 1 point per dollar spend on anything else.
Reward points can be redeemed for travel on any airline with no blackouts or other restrictions, and if you spend $650 in the first three months, you’ll get 20,000 bonus points.
This card also has a promo rate of 4.99% for online balance transfers (with a 2.5% transfer fee capped at $100 max). There is an annual fee of $50, but it’s waived for the first year.
PenFed Visa Platinum Cash Back Rewards Card
The PenFed Visa Cash Back Rewards card is a great all around cash back credit card. This card features 5% cash back on gas purchases paid for at the pump, 2% cash back on supermarket purchases, and 1% cash back on all other purchases. There are no spending tiers, so you get these percentages from your first dollar spent.
Another nice feature is that your cash back rewards are credited monthly, and there is no annual fee. I’ve heard from a number of readers that this is their favorite “general rewards” card. As above, this card also features a 4.99% balance transfer rate for 24 months with a 2.5% transfer fee (capped at $100 max).
The PenFed Promise Card is a visa card that was just featured by the New York Times Bucks Blog as “a decent product for those in debt.” This card features an introductory interest rate of 7.45% which lasts for a full 3 years; after that it jumps to Prime plus 6.74% (today that would be 9.99% – which is far below current average credit card rates).
But what is truly remarkable about this card, is that it comes with is no fees. That means:
- No annual fee
- No over-the-limit fees
- No currency conversion fees
- No balance transfer fees
- No cash advance fees (although the rate for advances is 17.99%, not the lower rate for regular balances)
- No late fees!! You don’t have free ability to blow off your bill – if you are late enough PenFed will send out a warning and then cut you off if you don’t pay promptly.
There are no rewards associated with the card, and while there isn’t an annual fee, you may have to pay a little bit of money to join the credit union. As noted above, if you’re not a member of the US armed forces and you don’t meet the other requirements for free membership to PenFed, you can pay $20 to become a member of the National Military Family Association to become eligible to join PenFed.
Published on March 20th, 2010 - 11 Comments
Filed under: Credit Cards, Reviews
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About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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11 Responses to “Credit Card Offers: PenFed Reward Credit Cards”
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March 20th, 2010 at 12:05 pm
That’s our card. They used to offer no balance transfer fees but are now in line with other credit unions. As the third largest CU they aren’t going away soon. We’ve had the easiest online loans from them.
March 20th, 2010 at 4:20 pm
Great for banking but… don’t use their mortgage service. We had a horrible experience there and ended up withdrawing our application after 3 months of battling.
March 21st, 2010 at 9:52 am
PenFed Visa Platinum Cash Back Rewards Card and the Costco American Express are the 2 cards we use. We even get the 2% back at Wal-mart which many cards don’t count as a grocery store. So this is how we use the cards together:
- Gas no Costco around :: PenFed at 5% back
- Grocery store :: PenFed at 2% back
- Gas in town at Costco :: Costco AmEx at 3% back
- Travel :: Costco AmEx at 2%
- Restaurants :: Costco AmEx at 2%
- Everywhere else :: either way they both give 1%
It’s really simple (PenFed at groceries and non-costco gas) and we just set this up about a month ago. Hasn’t been a problem and the extra rebate is credited monthly so we essentially are earning a higher effective rebate amount than the Costco AmEx which is credited annually.
Love the bank and their customer service is excellent! Highly recommend!
March 21st, 2010 at 4:58 pm
You know, I would love to switch to this (or something like this). The problem is that I’m unemployed. I’m actually NOT having financial problems, as I had and have a lot of savings, but no one will give me credit because I don’t have a real job and my only income is a little bit of freelancing. It’s bizarre that I can’t afford to switch to cheaper things — cheaper credit cards, even a cheaper car.
So I guess what I’m asking is, how strict are these guys about who they approve for a credit card? Since you have to join the thing first before you even know if you can get the card I’m hesitant to do it.
April 1st, 2010 at 11:34 pm
I am attempting to apply right now and it’s worthwhile to note that it looks like PenFed requires you to open a “Regular Share Account” in order to become a member. To remain a member, a balance of $5 must be maintained.
While this is nominal, it is in addition to getting the one time NMFA membership for $20. They give you the option to fund this by EFT, credit card, or check. The check option allows you to receive your account opening materials. This is the option I have selected.
I am pretty confused by this process. It definitely seems like I am opening a PenFed account, but I never received a confirmation that an actual credit card application was submitted, only that a Regular Share Account was opened…
Anyone else experience the same thing? I followed the link in the post…
April 2nd, 2010 at 7:52 am
@rs Your correct. I had to open a regular share account to. Both our grandparents were retired military and if you had a family member (that you know of) in the military then it seemed like you would qualify without the NMFA membership (though that’s a great thing to support).
After we applied, we still had to go in and separately apply for the credit card. I too was confused at first. The first signup process was purely to get you “in to the bank and a regular share account”. From there click on products and rates and the credit card. Then you will walkthrough that process. After we completed it we ended up calling them to get our pin (otherwise they’ll send it to you within 2 weeks) but we wanted to expedite the process. Let me know if you have any questions along the way.
P.S. They do counteroffer on your credit limit if you request too much so they won’t just deny you credit, they’ll counter.
April 16th, 2010 at 9:58 am
SCAM…. I have to tell you that I think that this is a scam. In order to even submit your information to be considered for a card, you have to become a member (non refundable $20) AND you have to deposit a minimum of $5 in the account….THEN you give them the information to be considered. I went through the process on egg shells and in the end, no approval for the card, and Im out $20. The purpose was to take advantage of the balance transfer offer, and although my FICO score is moderate, (mid 700’s) I was denied. In the future, any card or credit union that won’t consider processing an application BEFORE you hand over the cash, I’d turn it down.
PenFed is not the answer.
-D
April 16th, 2010 at 5:08 pm
Don, not a scam. You had to pay the 20 bucks to be ellibible for membership with PFCU since that is the only way a non military can join. The 5 bucks is a share purchace to belong to the credit union. All credit unions require buying a share to join. It is yours if you quit. I realize you are frusterated by not getting the CC but look at the low rates on loans and their savings rates and compare to a local bank or CU. I think Penfed has them beat.
April 19th, 2010 at 12:29 am
@Don – No credit union is going to process an application for you if you are not a member. Like “almost there” pointed out, you had to pay $20 to join NMFA so that you could be eligible for membership. All credit unions have membership guidelines, this one happens to be military related. I’m not sure what your credit report looks like, but my score is in the mid-700s as well and I was approved for a $30k Visa.
May 13th, 2010 at 11:21 am
We had a high interest rate credit card with Wells Fargo — one of the most horrify companies to do business with and should be avoided at all costs.
PenFed had a 7.99% unsecured personal loan. I opened an account for $25. The loan application process took all of 4 hours. I had a deposit of $9000 in my account within a day.
That $25 saved me thousands in interest since my Wells Fargo card as at 17% APR. It’s worth considering. We had looked at Lending Club, but with all the fees and such this was way cheaper.
July 8th, 2010 at 2:51 pm
@Don…not a scam, I just sign up with NMFA for $20 and then started a $5 accoutn with PenFed and applied for the card…was approved instantly and offered a credit line twice the size of any of my other cards.