The PenFed Promise Visa Card Offers a Way to Escape Your Big Bank

By Jason Steele. Last updated 17 July 2014. 1 comment

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I have always gotten along well with my credit cards and the banks that issue them, but I know that my experiences are not typical. It seems that most of the people I know struggle with high interest rates, crazy fees, and a general feeling that their bank is out to get them.

For these credit card users, I have always had a single recommendation — don’t just change the bank you use, stop using banks altogether. I am not advocating carrying a pocketful of cash and living off the grid. No, what I am saying is that the friendliest bank in the world is not a bank at all, it is a credit union.

The Pentagon Federal Credit Union, or PenFed, was founded to provide financial services for members of the United States’ armed forces and government contractors, as well their families and households.

PenFed offers its Promise card that features low interest rates and absolutely no fees.

How This Card Works

Click here to applyNew cardholders enjoy a product with a 7.49% introductory APR for three years. After that, the standard interest rate rises to 9.99%. These are very low rates, but the great thing is that there are no fees. I was initially skeptical of that claim, but after an exhaustive search of this card’s terms and conditions, I have verified it. The annual fee, foreign transaction fee, balance transfer fee, cash advance fee, late fee, and over the credit limit fees are all zero. There is also no penalty APR.

What’s the catch?

For one, cardholders are required to receive their statements electronically. And to apply for this card, you must be a member of the credit union. Membership is open to members of the military and uniformed services, employees of many different defense related organizations, their family members, and even members of the same household of an eligible person. But even if you don’t qualify on this basis (which seems to cover at least half the U.S. population), you can still join a qualifying organization for a minimal cost. For example, you can become a member of Voices for America’s Troops for a mere $15.

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Pros

  • Low interest rates. The interest rate of 7.49% is super low, but technically it is just an introductory rate for three years. Even the standard interest rate of 9.99% would make it one of the lowest rates of any credit card. Like the interest rates of most cards, this is a variable rate that can go up with the Prime Rate. Fortunately, the Prime Rate hasn’t changed in years and is not expected to.
     
  • No fees. There are simply no fees for this credit card. It almost doesn’t seem possible that you could abuse this card by making late payments every month without incurring any penalty, yet it is true. It is likely that at some point PenFed would probably just suspend a deadbeat’s account.
     
  • PenFed. The Pentagon Federal Credit Union is a very large and trusted institution founded in 1935. Once you are a member, you are eligible to receive all sorts of other financial services as well as personal finance counseling.

Cons

  • No rewards. This is one the best credit cards offered, but there are still no points, miles, or cash back to be had.
     
  • Limited promotional financing deals. Other cards offer 0% APR introductory financing on new purchases and balance transfers. Currently, the Promise card offers a 4.99% promotional balance transfer offer and 0% financing for six months on purchases from certain electronics retailers. If you are in desperate need of a 0% APR balance transfer offer, you need to look elsewhere.
     
  • Membership hurdles. It is not very hard to become a member of PenFed, but it is an extra step you need to take before applying.
     
  • It is still a credit card. You can still accumulate debt, incur interest, and are obligated to pay for your purchases. If you don’t make your minimum payment, you may not be directly penalized, but your credit score will suffer.

Who This Card Is Best For

This is the ideal card for someone who is sick and tired of double digit interest rates and exorbitant fees. By creating a simple and affordable product, the PenFed Promise has become the credit card for people who hate banks.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

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PenFed now has the Defender American Express card with 1.5% cash back on every purchase and absolutely no fees. Must be in military service, the National Guard, the Reserves, or for a limited time through 3/31/13, an honorably discharged Veteran of the United States Military to apply.
https://www.penfed.org/defender-cash-rewards/