Sometimes the credit card gods give and sometimes they take away. PenFed recently decided to do a little of both to its Platinum Visa card. Continuing a trend that it started a few years ago, PenFed has announced that it will decrease the rewards on its Platinum Visa Cash Rewards card. While gas purchases will continue to earn 5% cash back, all other purchases will only earn a 0.25% cash rebate, down from its current 1%. This change is effective February 1, 2012. At the same time, the regular purchase APR will be reduced from its current 13.99% to 9.99%.

PenFed also announced that it will introduce a new rewards card with a reasonably attractive rewards structure. The new PenFed Platinum Rewards card will earn 5 points per dollar spent on gas, 3 points per dollar spent at supermarkets and 1 point per dollar on everything else. Points can be redeemed for merchandise, travel, gift cards, or Visa prepaid cards. Though redemption rates aren’t available online yet, you can expect to get a value of 1 cent per point on prepaid cards, according to PenFed customer service.

PenFed is encouraging existing Platinum Cash Rewards Card cardmembers to switch to the new points-based card by offering a limited-time bonus of up to 25,000 points worth $250 towards merchandise, gift cards or other rewards. Existing cardmembers can earn 5,000 the first time they use their new rewards card and another 20,000 points for spending $1,000 within the first 3 months.

To switch to the new points card, visit PenFed.org/MoreRewards. (Note that even if you do decide to transition to the new card, you won’t actually be switched until the start of your first billing cycle after February 1, 2012.)

With these changes, the cash back card remains an excellent option for gas, as it will continue to earn a 5% rebate, credited monthly. But it’s hard to recommend its use for anything else.

The points reward card on the surface appears to be a good alternative, though just how good it is will be dependent upon how well its reward options, such as gift cards, suit you. To get an idea of the rewards you may be offered (as well as how much they may cost), you can look at the rewards available for the PenFed Travel Rewards Amex here. It should be noted, however, that if you had both a PenFed Travel Rewards Amex and the new PenFed Platinum Rewards Visa, the points earned from each card would go into separate pools that cannot be combined, so it’s safe to assume that the rewards offered for each card will be different as well.