Which PenFed rewards credit card is better?

PenFed credit card

We’ve long appreciated the credit cards from Pentagon Federal Credit Union for their low fees and APRs.

Now PenFed is rolling out its new Platinum Rewards Card, which offers 5% back on gas purchases, 3% on supermarket shopping and 1% for all other purchases -- all with no annual fee.

Sounds great.

To top it off, PenFed is offering a $250 sign-up bonus, 5,000 points -- worth $50 -- for the first time you use the card and another 20,000 points -- worth $200 -- if you charge $1,000 to the card in the first three months.

Even better.

But wait.

The new Platinum Rewards card is the newer version of PenFed’s current Visa Platinum Cash Rewards card.

In many ways, the two cards are similar.

Both offer an APR of 9.99%.

Both have rewards.

The Visa Platinum Cash Rewards offers 5% back on gas, but it doesn't have a specific grocery reward and its return on all other purchases just fell to 0.25%.

While that cash-back reduction might seem like the ideal reason to upgrade to Platinum Rewards, collecting rewards on this new credit card has been made far more difficult.

That's because Visa Platinum Cash gives you rewards in the form of an automatic monthly statement, while Platinum Rewards earns points, not cash.

And you can only redeem those points for merchandise, travel, gift cards and Visa prepaid cards.

Why would you want to redeem your card points to get another card that doesn’t earn rewards?

Because PenFed is a credit union, you’ll need to become a member before you can apply for a credit card.

Although it’s a credit union for military and government employees, anyone can join with a one-time, tax-deductible donation to a qualifying charity. Give $20 to the National Military Family Association or $15 to Voices for America’s Troops, and you’ll be a member for life.

But keep in mind that PenFed wants a stellar credit record in its card applicants, so not everyone can get them.

Compare this offer with the best cash-back credit card offers in our extensive database.