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Maximizing PenFed Cards: 5% Cashback on Gas and Free Flights

by on November 29, 2011 · 34 comments

in Credit Cards, PenFed

All too often, the best credit card deals are issued by the usual suspects: Chase, American Express and Citi. There are a bunch of other issuers, but most of the action is happening with the big three.

However, I’ve always heard about “PenFed” cards and recently sat next to a TPG reader on a flight who raved about his PenFed gas card. On top of this, several TPG readers have recently tweeted and emailed me with their positive experiences with PenFed, so I thought it was time to do some research of my own.

The Pentagon Federal Credit Union (PenFed) offers two main rewards cards: The Visa Platinum Gas/Cash Rewards Card and the Premium Travel Rewards American Express. The great thing is that once you are approved for one of them, you can call and have them create you the other card and it will be no additional credit inquiry – they’ll simply split your existing approved credit line for both cards and neither have an annual fee.

The main draw to the Visa Platinum Gas/Cash Rewards card is that they give you a whopping 5% cash back on all of your gas spend, up to $50,000 a year. The rebate even posts with your statement – so if you charge $100 in gas, it’ll only post to your bill as $95. In my opinion, the next best cards for gas purchases are the Ink Bold and Amex Premier Rewards Gold which both give 2 points per dollar, but even if you value those points at 2 cents a piece, you are only looking at a 4% rebate. If you value them more than that, it may make sense to use those cards instead.

The Premium Travel Rewards American Express has four key features:
1) Sign-up bonus of 20,000 points when you spend $650 within three months. Those points can’t be transferred to any airlines/hotels, but they can be used at about 1.5 cents a piece towards purchasing any airfare or at 1 cent a piece toward merchandise (like Bose in-ear headsets for 10,600 points). Airfare purchased using points will also earn miles and elite status.
2) No annual fee.
3) 5 points per dollar spent on airfare. Considering points can be used for 1.5 cents a piece when redeeming for airfare, this is like a 7.5% return spent on airfare – pretty nice.
4) No foreign transaction fee. This is one of the fee no annual fee cards that don’t have foreign transaction fees.

Also, if you are carrying balances on high-APR cards, it might make sense to move them to PenFed, because they are waiving any transfer fees through December 31, 2011, and granting a 4.99% promotional APR on balance transfer for 24 months. Obviously it’s ideal not to carry balances, but if you are paying crazy interest fees carrying a balance on another card (especially on charge cards) you should crunch the numbers and see if this deal makes sense for you.

Overall, these cards aren’t going to get you a ton of first class tickets around the world, but they can save you money on upcoming flights and get you a nice return on gasoline spend. These days every dollar counts!

Applying for these cards is free if you:
a) Are in the armed forces
b) Work for the government in some shape way or form
c) Belong to an association related to the government (there’s a drop down list of options like American Red Cross)
d) Have a relative or housemate who is eligible (armed forces, government worker, etc)
e) You live or work on a military base

Eligibility criteria.. they aren’t too picky

If none of the above, don’t worry. You can also open a savings account (and fund it with a points-earning credit card :-) ) with only a $5 deposit. They also give the option of joining Voices for America’s Troops for a one time fee of $15 (and you don’t need to stay a member) or National Military Family Association for a one time fee of $20.
I’m holding off on any new applications because I’m in the process of getting a mortgage, but I think I’ll get these when the dust settles. While I won’t shift much of my spend away from my workhorse cards (Sapphire Preferred and Premier Rewards Gold), at a very minimum getting these cards is like getting $300 towards travel and a permanent 5% discount on gas – not bad since there are no annual fees.

Feel free to share your experience with PenFed credit cards!

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author.s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through the credit card issuer Affiliate Program.

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  • Bltsandwich8

    I love the PenFed gas card! Also very important to note – as of a month or two ago, it no longer has foreign transaction fees! (I think PenFed did away with them on all of their cards at the same time, but I know about the gas card for sure).

  • Infinion

    ‘The rebate even posts with your statement – so if you charge $100 in gas, it’ll only post to your bill as $95′ Is this actually true now? I’ve had the penfed card for maybe two years now, and I’ve never seen it do that. For me, the rebates are credited as one lump sump at the statement cycle date. So, I’ll see the $100 gas charge post, then at the end of the cycle, I’ll see a $5 credit assuming that’s the only think I purchased for the year.

  • Andre LaPlume

    I was approved last week, as my father is a veteran. They don’t ask you to prove it however. They mailed me forms and asked for two pay stubs – no big deal. We’ll apply for a separate card for my wife after I get mine. Seems like a sweet deal, and their loan rates are very reasonable.

  • http://getgowing.wordpress.com Get Gowing

    What are the terms regarding funding an account via credit card? Are there any fees?

  • Andre LaPlume

    I should have added I’m getting the Amex card for the 20K points and my wife will get the Visa for the gas benefit. My company pays for my gas.

  • KB

    Unless I missed something, it doesn’t appear that State Gov’t employees are eligible for membership.

  • Infinion

    @KB, I think that’s probably right. It’s for the pentagon after all. But, anyone is actually eligible. Just join one of the many support organizations for $15 or $20, one time, and your in. It should pay off the first month.

  • Andre LaPlume

    Max of $100. Saw no fee.

  • KB

    Thanks. I can join via veteran relations, but was looking if I could do it as a State Gov Employee. The gas card sounds greats but we’re also about to refi a house and I’ve got a number of hard pulls on my report in the past month. Need to wait for the mortgage to close before I start signing up for anything new.

  • http://www.facebook.com/profile.php?id=1423706237 Spencer Wheelwright

    Does anyone know how the process works when redeeming points for travel? How competitive are the prices (i.e. same as what I can price elsewhere)? How’s the travel redemption website? Thanks!

  • Ed

    I have both cards.

    In my experience, service is really poor: they are very slow and require you to follow up repeatedly if there are any issues. And the travel card is not a real Amex card, so don’ t think you are getting any of those benefits. I hope when it comes time to use my points, it won’t be a huge hassle but, on flyertalk and elsewhere, people have complained.

    The Visa card is fine–no complaints whatsoever.

  • Stwayne

    Hi Brian

    Hey I already have the visa card. if i call up split the credit line and open the AMEX card will i get the $20,000 bonus points if I spend $650.

    Thanks Brian for all you do.

  • Shuji

    I would have respectfully disagree with you on the best gas card next to this one. I would say that the Ink Bold with 2x on gas would be better than the Amex PRG card since I value Ultimate Rewards points more than Membership rewards now. Some would even argue that the Ink Bold would be even better than the PenFed card if they value their ultimate rewards at more than 2.5 cents per point.

  • Anonymous

    Totally agree with you! It slipped my mind that the new Bold offers 2x on gas.. i’ll update the post

  • Anonymous

    Yes- just confirm with them when you call

  • oldmanpeabody

    Yeah, I’m wondering about this too. Is it like the CapOne card where you just charge a flight to the card and then request a credit against your points? Also is the 1.5 cents apiece across the board or are there limitations on that? Another great post, thanks TPG

  • Anonymous

    KB: yes, you can. I am not a vet and I was able to join a few years ago due to my fathers service. At that time, even if you didn’t have a relation you could pay like $5 and that would qualify you.

  • nabeelj

    They recently devalued the PenFed travel points from being worth ~1.6c to being worth ~1.25c. See my FT post on the issue: http://www.flyertalk.com/forum/17438392-post184.html

  • Anonymous

    The PenFed Visa is really good. It’s my go-to card for gas. Just one caveat–make sure you use the card only to pay at the pump to get 5%, otherwise you only get 1% rebate on purchase. The rebate posts as lump sum credit the same month as your purchases, which is great.

    The PenFed Amex is good for the signup bonus and for use when they run category specials, like 5% on dining. Redemption is thru their website, and the cost in miles and availability of flights really varies a lot. Not as good as the Cap One Venture card, which lets you pay for flights at 1 CPM with no blackouts and you can redeem the points after you have flown, so you can double-dip.

  • Allen

    could you explain the double dip part? thanks

  • Anonymous

    Sorry if I wasn’t clear. The “double dip” part is about using your Cap One Venture Card to pay for travel upfront and get 2X points/$ spent. When the charge posts to your account, but before bill is due, you “pay” for the charge using your Cap One points at the rate of 1 CPM, i.e., 10,000 points = $100. That way, you earn points on your travel charges. The Pen Fed Amex doesn’t work that way–you simply redeem your points for airline tix at the rate shown on their rewards website. Sometimes it’s a good deal, but most often not, in my experience.

  • http://www.facebook.com/people/Hugh-Harding/616936555 Hugh Harding

    My interest is piqued on the part about funding a savings account with a CC. Is there a limit on the amount? Counts as a purchase and not a cash advance? Is this unique to PenFed, or are there other banks that one can do this with?

  • Nathan Keirn

    I already have the PenFed Travel Amex and just called to split my credit limit with the Plat Gas card and was told that I have to keep at least 5k on the AMEX and that they WOULD do another credit pull, but I am hoping that is not the case because I already have 15+ pulls this year. I will be furious if they did that.

  • Nathan Keirn

    Nevermind, the ass clown I spoke to earlier had no clue what she was talking about. I pray that she did not do a credit pull. I called up just now and the cards are on the way, no additional credit pull.

  • oldmanpeabody

    Hey hoglard1, can you provide a bit more info for those of us on the fence about the card? I have Cap One and understand how that redemption works, but when you say the PenFed Amex redeems points for airline tix at the rate shown on their rewards website, any idea how that actually works? Is it tied to the retail cost of that ticket (ie. the cost of a Delta ticket through Delta.com or similar) or is it a completely independent points-based system (ie. 25,000 points for a redemption but with unknown blackout dates, etc?) Thanks much!

  • Anonymous

    No, it’s not like the Cap One card, which is pretty simple. For Pen Fed Amex, once you log in to the Pen Fed travel rewards site to redeem points for travel, and select the airports you want to use, you will get various options (e.g., DL flight for xx miles, US flight for yy miles, AA flight for zz miles) and they sometimes differ. It’s hard for me to peg a value to the points, but in reading some FT entries, it looks like there was a recent devaluation so that points are worth ~ 1.2 cents. Unlike Cap One, which has no blackouts, you are limited to specific flights for a certain number of Pen Fed points.

  • Steve

    Last I checked the travel Amex points no longer could be redeemed at 1.5 cpp for airfare.
    Last time I logged in 20k points was good for $220 or 1.1 cpp.
    Another thing I like is they run promos. I currently get an extra 5k pts per month flog I put 2500 on the card. Makes it an extra 2 pts/$ on spending through October.

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  • Joseph

    I just got off the phone with them. According to the agent I spoke to they cannot split limits from Visa to AMEX. As a current Visa holder with Penfed I couldn’t get this to work for me.

  • ghitt

    I’ve had a car loan with PenFed for 2 yrs now (great rates btw), and I took your advice about going for both the visa and the amex. however they told me they can’t split credit lines between visa and amex cards (only visa to visa or vice versa), so it seems that’s no longer an option.

    To make matters worse they approved the visa and then denied my follow up amex application (which the rep told me to submit, promising they only pull credit if the last report is over 30 days).

    I’m currently trying to get them to reconsider, but it appears you shouldn’t apply for both cards (no matter what they say) and you can’t split the credit lines between the two anymore.

  • Guest

    I just got off the phone with PenFed. They were able to split my credit line between the two cards.

  • ghitt

    My reconsideration went through. It took about a weeks worth of fighting, but they finally split the line.

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  • Faith

    If you accrue points through the travel card, could you combine that with points from the gas card (and vice versa) to redeem points?

    So if I have some 1k points via the travel card and 1k points from the gas card and want to redeem something worth 2k points, could I do that? Or do they have to be used separately?

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