PenFed gas card review (and how you can get one in 2013)

Pentagon Federal Credit Union logoOne of the biggest benefits of credit unions is that their interest rates on loans and cards are almost always lower than banks. However, the drawback is that their credit card reward programs are usually just average. Well, Pentagon Federal (better known as “PenFed”) is far from typical for a credit union… you get great rates plus above-average rewards.

PenFed offers a few different cards but their Visa gas card is definitely the most popular. It gives 5% cash back at gas stations (when paid at the pump, not inside) year-round without any caps.

How can you get one?

You can’t apply for the PenFed gas card unless you are a member of this credit union. What are the qualifications you ask? Well, if you want to apply for a PenFed membership there are various ways you can qualify:

  • You are in the U.S. Military (Army, Navy, Marines, Air Force, Coast Guard, NOAA Corps, USPHS Corps)
  • You are an employee of a qualifying organization – there are several dozen orgs, defense contractors, etc. on this list.
  • You belong to a qualifying military-related organization or association
  • You are an employee of the U.S. government – not all branches and divisions qualify, but there are dozens that do
  • You are a relative or housemate of someone that qualifies
  • You live/work at an eligible location (i.e. various military bases)

For many Americans, there’s a good chance you will qualify for at least one of the above criteria (and all you need to do is qualify for one). But if you don’t meet any of the above, you can still join PenFed credit union. Anyone can join PenFed credit union by making a small one-time charitable donation:

  • National Military Family Association membership: During the PenFed application process you can join this organization by making a one-time $20 donation, which is tax-deductible.
  • Voices For America’s Troops membership: This option is only a $15 one-time fee.

So in a nutshell, anyone can get the Penfed gas credit card by making a one-time donation as low as $15. Paying $15 for a 5% discount on gas is worthwhile.

But a closer review shows it comes with a catch

  • For gas purchases which are paid for at the pump, the card pays 5% cash back.
  • For all your other spending, you only earn 1/4% cash back
  • There are no spending caps as is the case with some cash back credit cards.

penfed gas cardBeing that the PenFed 5% Visa gas card has no annual fee it’s a good offer, but only if you use it at the pump. You will be losing money if you use this card for anything other than fuel. Why? Because the 1/4% rebate on all other spending is 75% lower than even your basic run-of-the-mill credit card. So while you’re gaining on gas, you’re losing elsewhere.

However the biggest catch is the stringent approval process

If you think getting this is just as easy as any other credit card, you’re in for a big surprise! Often, but not always, the requirements are:

  • Last 2 years of income tax returns
  • Last 2 pay stubs
  • If you have a husband or wife, you may need to also provide their pay stubs (even if they’re not on the card)
  • Outrageously high credit score. How high? To give you an idea, I got denied from PenFed with a 790 FICO (that’s a real FICO, not FAKO) and a flawless credit history. Never a late payment in my life on anything and no debt of any kind when I applied.

Previously I always recommending people to apply for this gas card from PenFed, until I tried to get credit thru them myself. That headache, combined with the reduction of rewards from 1% to only 1/4% on everything else, I’m not exactly their biggest fan anymore.

Therefore for 2013, Pentagon Federal CU is no long the top choice. Instead I recommend this card, because it gives high rewards on gas and other categories:

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I have been able to use the Penfed Cash Rewards card inside of a gas station for purchases and still get the 5% back. Worked at Chevron and Shell gas stations. Yet the markup on prices of items inside the gas station i believe are much higher then normal stores.

10/25/2013: PendFed just told me that they will allow one to keep the 5% (versus the 3% new reduction) gas rebate if you open a Money Market SAVINGS account with them. The beauty of that is you KEEP that new savings account and the minimum amount to open one is a measly $25. Sure, that is same amount of 1 year’s annual fee that they want to charge withut the savings acct it. But that new savings account is yours to keep whereas the annual fee ain’t. It’s surely worth it to me and smart of them to answer the back lash of cancelled cards they surely would have faced without that new Money Mkt Savings option. I would have cancelled their card had the rep not told me about that new savings option to keep the 5% gas rebate.

Just got a letter they are charging $25 a year and you need to have another service of theirs ira, loan, mortgage and so on. They also are dropping it to 3% back.

This is an absolutely fantastic card. I have been using it for about a year and a half on gasoline purchases only and the rebates sure add up (5% is 20 cents off per gallon!). I didn’t have a problem getting the card at all, but my FICO is 800+.

It turns out that starting October 2013, the annual fee will NOT be free unless you happen to have another line of business with Pen Fed such as a money market certificate or other financial instruments. I think the fee will be $25 for those who do not have it deferred (as above). In addition, I believe it may have a 3% rebate, separate from the 5%, depending on your accounts with Pen Fed.

Make sure you ask the right questions in case you are subject to changes a month down the line.

Pentagon Federal Credit Union has issues with maintaining control of data. They have issued new cards to me on multiple occasions due to “compromised” credit card numbers. I would suggest using a different company.

“So in a nutshell, anyone can get the Penfed gas credit card by making a one-time donation as low as $15. Paying $15 is a small price to pay for a 5% discount on gas!”

$15 donation only allows anyone to become a penfed member. To get the gas card you must pass a strict credit check (penfed is very strict who they extend credit to). I have a credit score of 759 and just got rejected for the penfed gas credit card ): do you know any other cards that offer year round 5% off gas?

Same here. I donated $15, was allowed to join credit union. I have a 760 plus credit score but was rejected for the PenFed Credit Card. A phone call to customer service asking for a review fell on deaf ears.

Fort Knox credit union offers visa credit card that comes with 5% cash back on gas purchases, and 1% on the rest.

As a retired federal worker for the Department of Labor, will I qualify for Penfed?

I do not believe the Department of Labor will qualify for the free membership but the good news is you can just pay the one-time $15 donation and become a member of PenFed for live. Click on the link above to learn more.