topic Re: Thoughts on PenFed? in Credit Card Applications

Thoughts on PenFed?

belle6m2k — Fri, 06 Nov 2020 03:25:59 GMT

Recieved a pre approval in the mail for a Power Cash Rewards Visa. Not really looking for another rewards card as it doesnt really offer anything special. Im wondering though it would be a benefit to open a card as you have to open an account with the credit union to qualify. I do not belong to any credit union but I know they can be a benefit when shopping for cars as they usually have better rates. Yes or No on going through with the offer?

Re: Thoughts on PenFed?

AllZero — Fri, 06 Nov 2020 03:31:10 GMT

If the card does not fit your spend, then do not apply.

However, becoming a member of PenFed or other credit unions could be great for your auto loans, etc.

CU's to join for Savings Rate now and possible Credit Products later!

Re: Thoughts on PenFed?

AverageJoesCredit — Fri, 06 Nov 2020 13:24:51 GMT

The card may not offer something special for you but for some, a true flat rate 2% cb card is special. As @AllZero stated if you wont use the card do not apply but never hurts to have extra lenders in your pocket. You can always join PF and not apply for a cc

Re: Thoughts on PenFed?

cashorcharge — Fri, 06 Nov 2020 20:22:43 GMT

Agreed @AverageJoesCredit & @AllZero both have vaid points.

I would add....I too did not belong to any CU's before finding MF and diversifying my credit to include CU's has been helpful. Both PenFed and NFCU have been great to work with and very generous to me over these last few months.

With PF, I app'd for a card, got approved and then app'd for another a month later and got that too with the same starting CL...$15,000 on each. I don't recommend this as a strategy, though my profile supported it. Point being, a CU is likely to have different lending underwriting than a traditional bank and will work with you if necessary and it opens up an entirely new portfolio of credit options. If you proceed, you'll need to at the least open a Savings Account and fund it with $5.00 as that is required to hold a credit product with a CU. That's how my journey with PF started.

Good luck if you proceed.

Re: Thoughts on PenFed?

M_Smart007 — Fri, 06 Nov 2020 20:26:10 GMT

Being diversified with a Credit Union or a few has it's benefits

Especially if you need a personal or car loan. The rates can be pretty good compared to banks.

In the last two years, I have added a lot of credit unions.

They are also less likely to CLD you

Re: Thoughts on PenFed?

Aim_High — Sat, 07 Nov 2020 23:13:20 GMT

@belle6m2k wrote:
Recieved a pre approval in the mail for a Power Cash Rewards Visa. Not really looking for another rewards card as it doesnt really offer anything special. Im wondering though it would be a benefit to open a card as you have to open an account with the credit union to qualify. I do not belong to any credit union but I know they can be a benefit when shopping for cars as they usually have better rates. Yes or No on going through with the offer?

Your lack of profile signature or more data points in your posting makes it difficult to give advice.

What other cards do you currently carry?
Do you have any other cards that offer a flat 2% or higher cashback, uncapped and uncategorized?
Those mailers are more advertising that true preapprovals. PenFed can be a little conservative about approvals and some My Fico members have had a little trouble getting their foot in the door with them. What are your scores? Any lates or derogatories?
Do you prefer cashback or travel points? (Airline, Hotel, MR, UR, TY)
What are your primary spending categories and do you have higher payout cards for all that?

Those caveats aside, I have the PenFed Power Cash Rewards and think it's the best overall 2% card out there. Even if you optimize your cash back spending by category, a card that offers 2% or more on everything is great to have around. If you look at your spending for the last year or two, you'll probably see there were lots of things you spent money on that don't earn a higher category rate for one reason or another, whether it's the cards you carry, the Merchant Category Codes used (MCC), or exceeding spending caps on other cards.

If you're not a military veteran, you have to open an Access America Checking account and either keep $500 minimum daily balance or establish a $500 monthly direct deposit into it in order to waive the monthly fee and get the full 2% back on the card. For most people, that's not too hard.

I like that there are no minimum redemptions on the Power Cash so you can redeem as little as a penny. My Power Cash card also has a very competitive 9.99% interest rate, which is better than some of my other lower-earning cards.

I do recommend everyone diversify into both banks and credit unions. Credit unions offer lower APRs on most lending products (auto loans, mortgages, etc), plus they usually offer better deposit interest rates. Credit union fees are usually lower than banks since they are not-for-profit. And their credit card products are sometimes superior to what the big banks offer, such as the PenFed Power Cash Rewards or the AOD FCU Visa Signature that pays 3% cash back. PenFed's checking account earns either 0.20% interest (under $20K) or 0.40% interest (over $20K,) which is many times the interest rates equivalent accounts earn. (Some other credit unions pay only 0.05% which is still much higher than national banks.) And PenFed has a Premium Online Money Market Savings that is currently paying 0.60% interest even after the rates plummeted during the economic downturn.

So overall, depending on your answers above, I would say to go for it if the card fits your credit profile and existing card choices.

Re: Thoughts on PenFed?

belle6m2k — Sat, 07 Nov 2020 23:31:30 GMT

Thank you for the response. I will answer your questions to give you a better snapshot of my file. My scores as 757, 760, and 767. I have an AAOA of 6.5 years and my oldest account is 12 years. I have one auto installment loan but no mortgage as I inherited my house which was paid off. I have about 88,000 in credit limits across my bank cards. Right now my utilization is at 1% on one card as I follow the AZEO theory. My go to cards are my DC and my BCP. I use the DC for most purchases and the BCP for groceries but of course it has the limit. I do have 2 30 day lates from 3 years ago when my Mom was passing from cancer and 2 cars got missed one month. I have a BOA and capital one that I really just basically sock drawer and a few retail cards that get used sparingly. I haven't really researched the PenFed card much which is why I was asking for opinions.

Re: Thoughts on PenFed?

AverageJoesCredit — Sun, 08 Nov 2020 00:32:44 GMT

@belle6m2k im sorry to read about your Mom, may she be resting in Peace😇

After a couple years in Penfeds basement, i recently was invited to join the adults up in the break room. Just got the PCR and so far like what i see. I have to get used to how transactions post and how they report but honestly a good card to have . @Aim_High has the most in depth and well versed write up on this card imo and i value his advice

Re: Thoughts on PenFed?

Aim_High — Sun, 08 Nov 2020 23:02:03 GMT

@belle6m2k wrote:
... I do have 2 30 day lates from 3 years ago when my Mom was passing from cancer and 2 cars got missed one month...

Thanks for the updated data points and so sorry to hear of your Mom's illness and passing. That is certainly some extenuating circumstances. Who were the lates with and did you try any "Goodwill" letters to try to get the lenders to rescind the late reporting? Some lenders will do that and odds are about 50% success rate from what I've read. I probably ran about that 50/50 rate from some lates many years ago. It's definitely worth trying! Otherwise, they will probably stay on your record and inhibit your scores for at least the full seven years.

Re: Thoughts on PenFed?

Aim_High — Mon, 16 Nov 2020 18:21:00 GMT

@belle6m2k wrote:
... My go to cards are my DC and my BCP. I use the DC for most purchases and the BCP for groceries but of course it has the limit ... I haven't really researched the PenFed card much which is why I was asking for opinions.

Thanks for the data points. That helps to frame things a little. If you prefer cash back and already have a Double Cash, you might just prefer to stay the course with that card, especially if you like keeping things simple and are satisfied with that card.

Since you're brought up the PenFed Power Cash Rewards as well as the Citi Double Cash, I'll offer you more feedback about my own comparisons between the two. And I'll tell you why I thought the Power Cash Rewards came out ahead, at least in my own situation and judgment.

Citi Double Cash is one of the more popular 2% Cash Back cards on the market. I know a lot of My Fico members swear by their DC and use it heavily. While I don’t think there’s anything wrong with the card per se, I do think there are more compelling options. I believe the Citi DC is so popular for a few reasons. It’s with Citibank, which is one of the five largest banks in the US. It’s heavily marketed, so people hear of it a lot. I believe it's one of the longest-lived 2%+ cards available, predating many other contenders. For those who aren’t on My Fico or following card trends carefully, it may even appear to be the only card on the market that pays at least 2% cash back on everything. In reality, there are over a dozen competitors. Finally, the DC is one of only two 2%+ cash back cards that have no additional banking requirements.

Two years ago, I still had no cards that earned a flat 2% or higher uncapped and uncategorized cash back. I read about the options on My Fico, investigated the different cards through their fine print and reviews, and compared and contrasted them independently. While we all may differ in how we weigh the pros and cons of different aspects of cards, I’ll list my considerations for you to make your own decision. This is just a comparison of the Citi DC to the PenFed PCR, not all the other 2%+ cards.

I’ll also mention that I’m a military veteran and had already considered joining PenFed anyway. And as a veteran, I have no requirement to maintain a checking account to get the full 2% versus the basic 1.5% cash back. This seems to be a huge sticking point to some people, although I think it’s overblown. As I said earlier, PenFed has good banking products and several of the other 2% or higher-earning cash back cards require you to open membership and at the minimum maintain a savings (‘share’) account. The only personal*(credit cards that don’t require you to join a credit union, maintain deposits, pay an annual fee, have direct deposit or some other stipulation in order to get 2% cash back are either the Citi Double Cash or the PayPal Cashback Mastercard (Synchrony). All of the other personal* cards have some sort of strings attached. (*ETA: A similar business card which has none of those requirements is the AMEX Blue Business Cash. Also, the Capital One Spark 2% cash back Business card in year one currently has waived the AF but has one beginning in year 2.)

If you are a military veteran or service member, you qualify for the “Honors Advantage” program and earn 2% cash back on the Power Cash Rewards without any other conditions. If you are not a veteran and open a Power Cash Rewards Visa, you only earn 1.5% in rewards unless you maintain a checking account. PenFed’s only account is their “Access America” checking. It has a $10 monthly service fee. However, the fee will be waived if you either (1) maintain a minimum daily balance of $500 in the account or (2) if you have at least $500 direct deposited every month. These non-veteran requirements are what many find distasteful about the card. However, if you don’t mind doing some banking with PenFed, their deposit rates are very competitive, as I outlined in my earlier post.

Now on to my other considerations. My biggest general complaint about the Double Cash is the extent to which Citi goes in their fine print to create “breakage” with being able to fully redeem rewards or at the minimum to delay members in claiming rewards. It’s little stuff in the grand scheme of things that a lot of people just dismiss. As a whole, what it does for me is create distrust and discontent in the whole agreement. Here are some of the provisions:

“1+1”: The 1% when you buy and 1% when you pay is a catchy slogan. But it means you get credited 1% on new charges at the end of statement cycle and normally another 1% when you pay on the next statement cycle. You’re always lagging behind on getting access to your rewards. In comparison, my Capital One Quicksilver and PenFed Power Cash Rewards give me mid-cycle access to my cash back for the full amount, as charges are posted to my account. My AOD FCU Visa credits all my cashback earned that month at the end-of-month statement as a credit. Also, the 1% when you pay means that if you choose to redeem for statement credit against your charges instead of banking account credit, you lose that extra 1%. While the difference is only 1.98% to 2.00%, it could add up for Citi between all their cardholders. And it’s an example of how I think they are hoping the average consumer just won’t notice they aren’t getting the full rewards if they redeem to statement credit. Why not just keep it simple and pay a flat 2%?

Minimum Redemption: You could argue that credit cards have minimum redemption amounts to simplify bookkeeping, and if we were in 1985, I might actually believe you. With modern digital record-keeping, this rationale falls apart. The real reason any card has a minimum redemption value is to complicate redemptions and to try to keep you locked into using only their card to get to the next rewards level. It’s all in the lender’s favor and has no benefit to the consumer. Minimum redemptions help create breakage when people fail to redeem their accrued cash for various reasons. No minimum redemption greatly reduces the chance that will happen. The lenders also get to keep your money a little longer which earns them dividends. If you were to redeem them earlier, you could be earning those dividends instead off your cash back rewards. PenFed PCR (and PayPal Mastercard) have no minimum redemptions while Citi DC has $25 minimum. (Some other 2% cards also have redemption restrictions.)

Rewards Expiration: Most rewards cards today (including the PenFed PCR) say that your rewards never expire as long as your account is in good standing. Those that do have a limit on claiming rewards usually give you several years to do so. Citi says your rewards expire in only 12 months if there isn’t activity on the card, payments or purchases. While this is often easy enough to avoid, it’s another example of how the language is tilted towards Citi in favor of potential breakage.

Program Termination: Terms allow Citi to terminate the DC program with 30 days’ notice. PenFed allows at least 45 days.

Purchase Interest rates/APR: Yes, I pay-in-full monthly. Still, I believe in getting the best rates I can on every card. I have autopay set up, but only for the minimum due to avoid ever overdrafting my bank account. There may be a situation where I don’t pay off my full balance before the due date. Life happens. If it does, I don’t want to pay more than I need to. When I got my PCR, it offered a much lower APR range than the Citi DC (11.74% at the time.) In the spring of 2020 with the pandemic, PenFed raised their rates so the lowest published rate is a little more than Citi’s. However, my actual rate on my PCR is 9.99%. While some lenders are more willing to reward consumers with lower-than-published interest rates, I have serious doubts that Citi would ever give me such an attractive rate on the DC. The current advertised rates for the DC is 13.99% to 23.99%. The PCR is 14.99% to 17.99%. So the highest rates you could get on PCR is much less than DC.

Penalty Interest rates/APR: DC is up to 29.99% while PCR’s is 17.99%.

Cash Advance Interest rates/APR: DC is 25.24%. PCR is 17.99%.

Foreign Transaction Fees: DC has a 3% FTF while PCR has 0% FTF.

Cash Advance Fees: DC has a $10 or 5% Cash Advance Fee while PCR has 0%.

Late Payment Fees: DC waives the first one but then charges “up to $40.” PCR charges $20 to a maximum of $28, depending on the balance due.

Annual Fees: None for both.

Balance Transfer Fees: 3% of BT for both with $5 minimum for CITI.

Guaranteed Grace Period: DC will give you at least 23 days before interest is charged on new balances. PenFed gives you at least 25 days.

Current Signup Bonus: Citi DC has no SUB. PCR has a $100 SUB for $1500 spend.

Current BT Offer: PCR has a 12-month BT at 0% APR. Citi DC has a longer 18-month BT at 0% APR. Both charge a 3% fee for the intro BT.

Transferability: Citi made cash back earned on the Double Cash card transferrable to other Citi cards as Thank You (TY) points in September 2019. If you use Citi’s premium travel cards and transfer to partners, this is potentially a huge benefit. If you value the cash back in lieu of points or don’t carry the Prestige or Premier cards, this won’t make the Double Cash more valuable. PenFed’s cash back is not transferrable to other cards or transfer partners.

Payment Network: DC is a Mastercard. PCR is a Visa. Both are widely accepted, both in the US and abroad, so this is mostly a wash. Visa can be used at Costco while Mastercard is not accepted, but most businesses that accept one method accept either.

In summary, wins for Citi DC:

Banking relationship not required to earn 2%
Longer introductory BT offer of up to 18 months vs 12 months on PCR
Transferability of cash earned on DC to TY points which might increase their value.

Wins for PenFed PCR:

No minimum redemption amount on rewards
Overall lower interest and fee structure including no FTF
SUB $100 vs no SUB on DC
Rewards never expire
Less games in the fine print.

Re: Thoughts on PenFed?

Openwater — Mon, 16 Nov 2020 02:08:49 GMT

@Aim_High

Extremely in depth analysis. That's pretty much everything you need to know. Thank you for that!