Late last year, Pentagon Federal introduced its Premium Travel Rewards Amex. At the time it appeared most noteworthy because it made PenFed the first credit union to issue an Amex-branded credit card. Upon closer inspection, however, it appears that the credit card merits some serious attention, particularly for those who fly a lot.

Big Signup Bonus
Deal hounds will immediately appreciate the card’s generous signup bonus. It offers 20,000 bonus points when you spend $650 within the first 3 months, enough for a roundtrip airfare ticket or a $200 gift card. But, digging deeper, we see that the card is not just another churning opportunity.

Huge Rebate on Airfare Purchases
The Premium Travel Rewards Amex may seem automatically good for frequent fliers since it earns 5 points for each dollar of spending on airfare purchases, but the news is even better than that. While points can be redeemed for merchandise such as gift cards at a rate of 1 cent per point (10,000 points = $100 gift card), the rewards program really shines when it comes to redeeming points for flight purchases.

The terms and conditions of the program are decidedly confusing, with two different charts listed for airline travel redemption listed on the same page. I talked to a CSR who stated that different accounts might have different terms, though she did quote me the following redemption schedule:

Ticket cost $250: 15,625 Points
Ticket cost $350: 21,875 Points
Ticket cost $500: 31,250 Points
Ticket cost $750: 46,875 Points
Ticket cost $1,000: 62,500 Points

At those rates, each point would be worth 1.6 cents when redeemed for airfare. So, since airfare purchases earn 5 points per dollar spent, for each dollar spent on airfare, you would be earning 8 cents towards an airline ticket.

Other Perks
In addition, there are many other bonuses of this credit card that frequent travelers will enjoy. Among them:

• No foreign transaction fees. PenFed remains one of very few issuers to waive fees for transactions made in foreign currencies.
• Until December 31, 2010, dining and hotel purchases will also earn 3 points per dollar spent.
• Complimentary access to airport lounges around the world with membership to Priority Pass, with 2 free passes per year when spending reaches $15,000 annually.

And while it’s far from the main attraction of the card, the Premium Travel Rewards Amex also has reasonable balance transfer fees. For instance, online balance transfers are at the promo rate of 4.99% for 24 months, with fees waived if performed by June 30, 2010. After June 30, the normal fee of 2.5% (min $10, max $100) applies.

Membership has its privileges
PenFed membership is required to apply, but basically anyone is eligible. If you are not automatically eligible through various military affiliated organizations or the Red Cross, you can always become eligible by joining the NMFA with a small, one-time fee.

The card does carry a $50 annual fee, which is waived for the first year. To read the fine print or to apply, see this link.