Long-time blog readers will recall that I think Pentagon Federal Credit Union has the best credit card out there for gasoline. It pays you 5% of everything you spend on gasoline and automatically credits it as cash on your statement each month. All you have to do is join Pentagon Federal with a $5 deposit. If you didn’t qualify to join, you could just pay a $15 one time fee to join Voices of America and qualify that way. Unfortunately, PenFed is realizing that they’re pretty unique, and that lots of people are joining the credit union just to get this card. They’re making changes starting with the November statement that make this card less attractive.
Annual Fee and Lower Rate
The card is currently no-fee, but starting in November it will have a $25 annual fee. To make matters worse, it will reduce the gas credit to 3%, instead of 5%. Everything else put on the card goes to 0% from an already paltry 0.25% (I think it was 1.5% when I first got the card.) It’s still applied to your statement automatically each month.
There’s Still Hope
There is still some hope for those of us who like this card. I got $380 back last year (I shudder to think how much gas I’m buying that 5% is $380) on this card and would like to keep it. Pen Fed will keep the deal terms the same (5% on gas, 0.25% on everything else, no annual fee) IF you’re willing to use some other Pen Fed product, such as a checking account with direct deposit, a mortgage or home equity loan, or most easily, a CD. Their minimum CD size is $1000. The 2-year CD is paying 1%, or slightly better than my Ally Bank savings account where I keep my emergency fund. That’s not such a big deal to keep such a great card. I do dislike having to constantly be on the prowl for the best deals on credit cards and savings accounts (I’d rather set it and forget) but $380 a year is worth a little hassle for and I think even with the additional restrictions that it is still the best gas card out there.
Other Options
The Chase Freedom card offers 5% on gas, but only for one quarter a year, and it’s more of a pain to redeem rewards. Amex Blue offers 3% on gas (but 6% on groceries) making it also a decent choice. There are lots of other cards paying 1.5-3% on gas as well. I don’t know what other hoops Pentagon Federal is going to come up with in the next few years, but this one is low enough that I’m going to go ahead and jump through it. I’ll just put $1000 of my emergency fund into a 2 year CD. Even if I need the money (unlikely), I’ll only forfeit 180 days of interest, or $5. I’d rather have the $380.
Update Prior to Publication
Pen Fed has added some new options to the list that allows you to keep the card at 5% without an annual fee. The easiest to use is their Money Market Savings Account, which has a minimum of $25. It only pays 0.05%, but hey, it’s only $25.
Thanks for the info. I got this card after you recommended it before and I really like it. It currently has no foreign transaction fees either, a feature I haven’t taken advantage of yet, but would like to in the future. I think I’ll go with the money market as well to keep the 5% on gas.
Thats only half the story. Additionally penfed silently deflated redemption values for points in mid August. You used to be able to get $50 prepaid gift cards for 5000 points. Last I checked they were now 5900 points. $5/5000 was 5% back, if you spent $1000 on gas you got 5000 points, good for a $50 gift card. Now you still get 5000 points for spending $1000 on gas. However, to get the same $50 gift card takes 5900 points. To get 5900 points you need to spend 5900/5 or $1180 in gas. The $50 rewards is now only 50/1180 4.24% back. And before you ask last I checked, no the redemption balues dont get better for either higher point totals or individual store gift cards.
You do realize we’re talking about two different cards here, right? PenFed has a “points card” and also a “cash back” card. The changes you’re referring to are to the points card. One of the best features of the cash card is that it simply applies the cash back to your credit card statement each month. There are no redemption hassles.
Ya realized that after my post. I used to have the cash rewards, ill have to see if i can change back.
I’ll stick with my 2% on everything, no cap, no fee Fidelity Amex. I don’t like using different cards for different purchases, or carrying more that one or two cards, for that matter.
According to the PenFed website, it looks as if the 5% for gas is only good if I already have the card. For instance, if I applied for the PedFed cash card in November, I only get 3% without any option of annual fee waiver.
According to this page:
https://www.penfed.org/Platinum-Cash-Rewards/
It seems that for the next few weeks you can still get the old deal.
I have cd’s I bought 3 years ago that are 7 year cd’s. Will this count to prevent having the annual fee and keeping the 5%? I can’t find the answer to this question.
They count.
Fidelity American Express – 2% cash back on all purchases (no exclusions and no limit on rewards earned). No annual fee. One has to open a fidelity cash account (checking account basically), but this if free too. One can then transfer the money to other accounts or withdraw.
https://www.fidelity.com/cash-management/american-express-cards
I’m a huge fan. That’s my main card. However, I use the PenFed card to buy gas. 5%>>2%. Plus, there’s less hassle with the PenFed card since it is automatically applied. I don’t have to either open a Fidelity account or transfer money every month or so.
I also use the priceline visa 2% off of everything when they don’t take my american expresss 2%. The only thing is you have to wait to accumulate $25 and you can only redeem when you can afford the prodcut, so if you have $30 in cash, you can only redeem when you have an item that is $30 or less. So it is a little more cumbersome to use.
I was going to email you about this. I elected to “give them a $1000 loan at 1% for 2y”. The 5% back on gas is just too good to give up. It definitely is one of my pet peeves when credit card companies change their rules like this.
On a separate matter, I was looking to prequalify with PFCU for a new mortgage, so I filled out their 15 minute online application, only to find that at the end they require a credit card number so they can charge you unspecified fees if you do not close on their mortgage. (This is even just to prequalify, not to apply!) Nowhere on the site did it say that they would do such a thing. It was absolutely infuriating, and I called them only to get a pair of employees- who both insisted that this was disclosed on the home screen (I went back, and it was not) and even if not, they don’t make the rules so they don’t want to hear about it. Part of me wanted to sever the relationship with PFCU at once, but the 5% back on gas was still too good to give up.
Those changes sound really bad. I wouldn’t put up with it.
Then Penfed 2yr CDs are 1.25%, don’t know if they just went up, or you were looking at the wrong CDs
Probably went up. Keep in mind many posts are written weeks before publication.
I have the PenFed Cash Rewards card, and thanks to this post, I opened a Money Market account and confirmed that I will still get the 5% cash back on gas due to that. However, the 0.25% cash back in general will be removed. I’m OK with that. The 25 bucks that I used to open the account is peanuts compared to how much gas me and my family goes through.