Home > Credit Card Reviews > PenFed’s New Cash-Back Credit Card: Should You Apply?

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There’s a new 1.5% cash back credit card in town — actually make that 2% cash back, in some cases.

Pentagon Federal Credit Union (affectionately known as PenFed) recently launched its Power Cash Rewards Visa Signature Card. The card is available to all PenFed members and offers additional cash-back perks for military members and other eligible customers. There are also a few enticing bonus offers.

Wait … What’s PenFed? 

PenFed is a credit union that provides banking, loans and other financial services to more than 1.5 million members that serve the United States. Their member base primarily consists of current and former military members, government employees, military-related organizations and the families of eligible members.

To get a PenFed credit card, you must be a current or eligible PenFed member (if you aren’t a member, you can become one when you apply for a credit card). To be eligible, you must be an active or former member of the U.S. military, an employee of the U.S. government, a member of a qualifying organization (such as Voices for America’s Troops) or have an eligible member in your family.

How Does the New PenFed Card Work?  

The Power Cash Rewards card is appealing, in part, due to its simplicity. There are no spending categories or confusing restrictions. Cardholders get an unlimited 1.5% cash back on every purchase.

Plus, with the PenFed Honors Advantage Program, qualifying cardholders also get an additional 0.5% cash back for a total of 2% unlimited cash back. To qualify, you must be a current or former U.S. military member or have a PenFed Access America Checking account (you can open a new account when you apply to get the additional 0.5% cash back).

Cash back can be redeemed in the form of statement credits or account deposits.

Right now, PenFed is offering a bonus $100 in statement credits when you spend $1,500 in the first 90 days of the card. There are no foreign transaction fees.

Standard features such as mobile pay options and card security are also included.

What Are the Card’s Costs?

The Power Cash Rewards card has no annual fee. The annual percentage rate (APR) on purchases is a variable 9.24% to 17.99%, depending on creditworthiness. That is a great potential rate for customers who can qualify on the lower end of that range. (You can get an idea of where you might fall by viewing two of your credit scores, updated every 14 days, for free on Credit.com.)

PenFed is also currently offering a 12-month 0% APR for all balance transfers (they will apply a 3% fee to each transfer). After 12 months, any remaining balance or new balance transfer will receive a variable 9.24% to 17.99% APR.

Why Should You Apply?

If you’re already a PenFed member (or you’re eligible to become one) and you’re looking for a cash-back credit card, you might be hard pressed to find a better option. PenFed’s cash-back card is simple and has no complicated features. Customers with good-to-excellent credit could potentially qualify for a very attractive interest rate, and there’s also no annual fee. Many other cash-back cards have higher interest rates or annual fees.

If you qualify for the 2% unlimited cash back rewards, you’ll particularly have trouble finding a better offer. Most other cash back cards don’t offer unlimited 2% cash back on all purchases with the Citi Double Cash card being one of the notable exceptions — full review of that credit card right here. (Full Disclosure: Citibank advertises on Credit.com, but that results in no preferential editorial treatment.)

If you’re in need of both a credit card and a credit union, it might also be worth an application. PenFed offers many other services, including banking, student loan financing, mortgages and personal loans.

Also, generally, cash-back credit cards are excellent options for people who pay their credit card balances in full each month. That way, you maximize the cash back and won’t end up putting it toward interest.

Why Shouldn’t You Apply?

If you already have a good cash-back card or you’re shopping around, you should carefully measure PenFed’s cash-back rewards against the alternatives. Many cards offer larger cash-back rewards on certain spending categories (like gas or groceries) and could also offer different introductory rewards.

Plus, as we intimated earlier, cash-back rewards may not be the best option if you tend to carry a balance from month to month. Any cash rewards you earn could be limited or erased entirely once you factor in interest. In other words, if you carry a balance frequently and/or the allure of cash back will entice you to overspend, you’d be better off with a straightforward low-interest credit card. Finally, if you’re not interested in becoming a PenFed member, or you don’t qualify to become a member, there’s no use in applying.

Remember, active-duty and retired military members have some solid credit card options that civilians don’t. You can find a full guide to picking a military credit card here.

At publishing time, the PenFed Power Cash Rewards Visa Signature card is offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for this card. However, this relationship does not result in any preferential editorial treatment. This content is not provided by the card issuer(s). Any opinions expressed are those of Credit.com alone, and have not been reviewed, approved or otherwise endorsed by the issuer(s).

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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