Flat-rate cash-back rewards credit cards offer you a ton of convenience and simplicity, but not always the best possible cash-back rate. The PenFed Power Cash Rewards Visa Signature® Card, however, takes a step in the right direction by upping the amount you can earn over that offered by several existing heavy hitters in the flat-rate rewards field.
PenFed Power Cash Rewards Visa Signature® Card cardholders earn 1.5 percent cash back on all their purchases – a pretty standard rate across the flat-rate cash-back rewards board. But you can earn up to 2 percent cash back on all your purchases if you qualify for the Penfed Honors Advantage Program – and it's fairly easy to do so. You qualify by either having a PenFed Access America Checking Account (yes, you can open a new account in order to qualify for the program) or if the primary or joint applicant is in active military service, the National Guard, the Reserves, has been honorably discharged or is a veteran.
Suddenly, the PenFed Power Cash Rewards Visa Signature® Card stacks up nicely against some of the more well-established flat-rate cards like Chase Freedom Unlimited®.
The Pentagon Federal Credit Union is, as the name suggests, a credit union so you need to be a member to take advantage of the products and services (including the PenFed Power Cash Rewards Visa Signature® Card). It's fairly simply to qualify, however. Current or former members of the military, U.S. government employees, employees of certain organizations, membership in particular organizations or associations and more categories are eligible. In fact, anyone can join simply by becoming a dues paying member of Voices for America's Troops or the National Military Family Association, both of which currently require modest one-time, non-refundable dues. Pay your dues and you're eligible for Penfed membership.
In a word, it's the simplicity that attracts us to flat-rate cash back cards. Sure, there are ways to earn greater amounts of cash back, but you have to be willing to keep up with rotating or at least tiered reward structures. If you just want to use your card and know you're earning solid cash back whether you're at the gas station or buying tickets to a summer concert, than a flat-rate card like the PenFed Power Cash Rewards Visa Signature® Card is right for you.
In the case of the PenFed Power Cash Rewards Visa Signature® Card, the possible earn rate is greater than with some other flat-rate cards. Two percent is a not-too-shabby amount of cash back to rake in every time you use your card. While the 1.5 percent basic rate is fine, there's really no reason not to do what it takes to qualify for the Penfed Honors Advantage Program since you can do so with only a checking account.
"PenFed has certainly raised the bar with their new cash-back card," said Curtis Arnold, founder of CardRatings and a consumer credit card educator and advocate. "They have leaped overnight from a good cash back card to a best-of-breed category, particularly for members of the military and PenFed banking customers. The 2 percent earn rate, coupled with the reputation of PenFed, makes their new card a very compelling offer."
In addition to its solid cash-back opportunities, this could be a good card for you if you already have some credit card debt you're looking to spend a few extra months paying off interest free. New cardholders have 12 months of no APR on balance transfers, so be sure to take advantage of that money-saving option if you need it.
Lastly, there's no annual fee or foreign transaction fees to contend with, so you can carry this card in your wallet for a rainy day or for that trip overseas.
Even if you're earning the 2 percent back on all your purchases, you could be missing out on even higher rewards if you are the kind of person who can keep up with rotating categories or tiered rewards. In particular, if you know you spend disproportionately on, say, groceries, there are cards out there that will reward you handsomely for that spending (to the tune of 5 or 6 percent cash back, actually).
One other consideration is that you will pay a 3 percent fee for each balance transfer, even during that introductory 0 percent period. Sure, you could still stand to save money in the long haul since you won't be paying interest during the intro period, but there are cards available that offer 0 percent intro periods without a balance transfer fee.
We've mentioned Chase Freedom Unlimited® already, but let's really dig into how these cards compare. First of all, Chase Freedom Unlimited® cardholders earn 1.5 percent cash back, the same base percentage as PenFed Power Cash Rewards Visa Signature® Card members but without any option to up that earn rate to 2 percent like you can with the Penfed card.
Chase Freedom Unlimited®'s intro offer is better at $150 cash back after spending $500 within the first three months (as compared to Penfed's $100 statement credit after $1,500 spent), and new cardholders can take advantage of 0 percent APR on balance transfers AND purchases for 15 months, so longer than with the Penfed card and for both balance transfers and purchases. That said, Chase Freedom Unlimited® cardholders will pay a 5 percent balance transfer fee as compared to the 3 percent fee with the PenFed Power Cash Rewards Visa Signature® Card.
Lastly, if you plan to travel abroad with your card, you'll want to go with the PenFed Power Cash Rewards Visa Signature® Card as Chase Freedom Unlimited® charges a 3 percent foreign transaction fee on all overseas purchases.
The Bank of America® Cash Rewards Credit Card is a no-annual-fee tiered rewards cash-back card. That means that you stand to earn more cash back if you spend within the higher tier categories; however, only the gas category will actually earn you a higher percentage cash back. Bank of America® Cash Rewards Credit Card members earn 3 percent back at gas stations and 2 percent back at grocery stores and wholesale clubs on up to a combined $2,500 quarterly in those categories. After that and on all other purchases you earn 1 percent back.
With that in mind, PenFed Power Cash Rewards Visa Signature® Card members who take advantage of the Penfed Honors Advantage Program can likely earn more cash back in the long run since they earn an unlimited 2 percent back on all their purchases.
That said, Bank of America® Cash Rewards Credit Card offers $150 bonus online cash back for spending just $500 in the first 90 days (a lower threshold for the bonus than with the Penfed card) and features 12 months of 0 percent APR on purchases and balance transfers made within the first 60 days (then, 13.99% - 23.99% Variable APR on purchases). If you are looking to make a large purchase in the near future and take some time paying it off, you could save yourself interest and a balance transfer fee by purchasing directly on the Bank of America® Cash Rewards Credit Card.
You won't pay an annual fee with Discover it® - Cashback Match™, but you do stand to earn substantial cash back if you play your cards right. Discover it® - Cashback Match™ is a rotating categories card so every quarter you'll be eligible to earn 5 percent back on up to $1,500 spent in that quarter's bonus categories when you sign up. After that and on all other purchases, you'll earn 1 percent back.
The real jewel of Discover it® - Cashback Match™ is the introductory bonus through which Discover will MATCH all the cash back you earn during your first year of card membership. If you do the math, that means you could effectively earn up to 10 percent back on those bonus category purchases during your first year. That's huge.
The trick with a rotating categories card, however, is keeping up with the changing categories and maxing out the cap each quarter. If you prefer the simplicity of just using a card and knowing what you're earning every time, the PenFed Power Cash Rewards Visa Signature® Card is a better option.
These cards are otherwise similar: Neither charges an annual fee and both have introductory 0 percent periods for balance transfers (though Discover it® - Cashback Match™ also offers the 0 percent period for purchases and its period is longer at 14 months).
The PenFed Power Cash Rewards Visa Signature® Card is an excellent option for the person wanting to earn cash back, but who doesn't have a particular interest in keeping up with rotating categories or caps on the earning. If you decide this is the card for you and you aren't military, seriously consider opening a Penfed checking account in order to take advantage of the bonus cash-back earning rate.