PenFed is short for The Pentagon Federal Credit Union, a credit union for the branches of the military and government, and has been a popular credit union for personal finance enthusiasts. A few years ago, you could get some pretty high interest rates on their certificates of deposit. Today, the interest rates are more pedestrian but I bet they’ll be more attractive in the future.

However, the real claim to fame, at least today, is their 5% cash back on gasoline credit card.

5% Cashback on Gasoline

While normally known for its great interest rates on deposit products (savings, CDs), offers a PenFed Visa Platinum Card that gives you 5% cash back on gasoline purchases. The PenFed Visa Platinum card is pretty lights out when you compare it to its competitors. You get 2% cash back on supermarket purchases, 5% cash back from gas purchases at the pump, and 1.25% cash back on all other purchases.

If that wasn’t enough, there are no limits to the rewards and the cash back is credited to your card each month. No points, no games, just straight up cash credited to your statement. That’s ideal.

Eligibility

Like any credit union, it’s only as good as your ability to join. To be eligible, you had to be connected to the military in some way – either active or retired, related to someone who is, worked at a military installation, a government employee, or employee/volunteer with the American Red Cross (here’s the full eligibility list).

Fortunately, if none of those apply, you can join the National Military Family Association and be eligible for an account through your affiliation with them. A single year annual membership costs $20, and eligibility to PenFed, and you can decline to renew the following year.

Deposit Products

Right now, the deposit products (checking, savings, CDs) aren’t all that spectacular. They used to be leaders in certificate of deposit rates but the shorter term rates just aren’t that appealing. A 12-month CD for 1.25% APY puts it near the back of the best CD rates, though rates get a little better the longer you stretch the maturity. Their savings account yields 0.35% APY, again not very appealing.

If you do open an account, be aware of the various minimum account balances and service fees PenFed charges for deposit accounts.

If I didn’t buy the vast majority of my gasoline from Costco, which only accepts American Express credit cards, I’d be all over this. I still might join in the near future just to get access to their CDs, which I anticipate will become more attractive whenever the Fed begins raising interest rates again.

PenFed Visa: Best 5% Cash Back Rewards on Gas Credit Card from personal finance blog Bargaineering.com.    

Combined with near (or above) record Wall Street bonuses and you’d think this was 2006.  Kudos to Ben Bernanke… he is succeeding on his master plan.  No need to actual produce things of value – simply increase the money supply, let people flip (a) paper stock certificates or (b) real estate… and we all feel richer.   Nirvana returns.

Via WSJ

• Four years after the collapse of the U.S. housing bubble, flipping homes is back in fashion. 
• During the housing boom, millions of Americans tried to make money by buying and then quickly reselling new houses and condominiums. That kind of flipping stopped several years ago as home sales stalled amid a surge in foreclosures and curtailed lending.
• Now, a different breed of flipper is proliferating: one who seeks bargains at foreclosure auctions.  Investors compete mostly with other full-time professionals who monitor foreclosure auctions at county courthouses across the country. The bidders often haven’t had a chance to inspect the property (who needs to actually see a propery to flip during a boom? no one – there are only winners when money is free.  Heck people were bidding on Phoenix or Las Vegas property in 2006 sight unseen, from other states …) or determine whether it’s occupied by tenants, who may be hard to evict.
• Flippers swoop in at public auctions of foreclosed homes, known as trustee or sheriff sales. In many states, the lender sets the minimum bid, and takes possession of the property only if no one bids more. In the past, the minimum generally was about equal to the mortgage balance due. But in today’s market, in which many home values have dropped far below the loan balance, lenders wouldn’t attract investors if they set the minimum at that level.
• So lenders, or the loan-servicing firms that represent banks and investors, are increasingly likely to set the minimum much lower. Their goal is to tempt others to buy the house and spare banks the headaches and costs that come with taking possession.
• Sean O’Toole, chief executive officer of ForeclosureRadar.com, a research firm, estimates that in November about 21% of homes sold in trustee sales in California went to investors rather than to a foreclosing lender, up from 6% a year earlier. The trend is similar in some other areas with high foreclosure rates, including Phoenix and Miami.  (i.e. 20% of all home sales in high foreclosure areas are essentially going to non home owners.  Boom!  America is back baby.)
• The advantage of such an outcome for the bank is that it gets money for the property right away, even if it isn’t enough to cover the loan balance due. The bank doesn’t need to make repairs to the home, cover the taxes and insurance, or pay real-estate-agent commissions.

Cursory anecdotal story

• Jon Mirmelli, a Phoenix real-estate investor, learned late in the morning of Sept. 28 that a never-occupied custom house on the northern fringes of this Phoenix suburb was going up for auction around noon the same day. The six-bedroom home, built on a three-acre desert plot, has a kitchen with two dishwashers, four ovens, “antibacterial” copper sinks, and a master “spa” bathroom with space for a flat-screen TV visible from the tub.
• The minimum bid, as set by a unit of Citigroup Inc., which had a $1.3 million mortgage on the home, was $379,900. After several minutes of bidding among investors and their representatives, some wearing shorts and flip-flops, Mr. Mirmelli won the home for $486,300. A week later, he agreed to sell it for $690,000 to a woman who moved in this month.  (ah, what a productive boon to society – multiply this by hundreds of thousands, perhaps millions of transactions – and the increase to GDP must be overwhelming)
• The Scottsdale property bought by Mr. Mirmelli was supposed to be the dream home for Brad and Michelle McCaughey and their three children. Mr. McCaughey, who grew up in Ann Arbor, Mich., was a minor-league hockey player and coach after graduating from the University of Michigan. About nine years ago, having moved to Phoenix, he says he discovered “a passion for real estate.” He became a real-estate agent and began investing with his father and brothers-in-law in rental properties. Soon they had a dozen homes.  (the circle of life… from 1 generation of home flippers to another)

More

• People who attend trustee sales here and in other foreclosure hot spots around the nation say the auctions have recently been attracting more bidders. (can you feel the fever building?) “Properties are getting bid up,” says Hal Feinberg, a Phoenix property investor. “You can still get good deals, but you’ve got to be more patient than you were a year ago.” He and other investors in the Phoenix area say they have been flipping a lot of the homes they buy to Canadians taking advantage of a weak U.S. dollar.

The National Retail Federation compared 2009 holiday shopping trends over 2008 and found credit-healthy and frugal are ruling consumers’ attitudes this Christmas. More consumers are planning to use cash than plastic when checking off their Christmas gift list, and there has been a dip in big ticket purchases like electronics and jewelry and a surge in cost-conscious gift categories like food and candy. This is expected given that the economy is still recovering, jobs remain scarce, and issuers are continuing credit card fee increases and credit limit cutbacks into the new year.

If you want to jump on this bandwagon of financially-fit shoppers, first jump into the helpful articles below for your credit report updates and personal finance needs.

Personal Finance News

• Scrooge teaches us to donate to charities, The Grinch reminds us Christmas isn’t about the presents, and 10 more money tips from holiday ‘experts’ at Bankrate.com.
• Wealth Pilgrim reveals the 5 best mistakes he ever made, and how they helped him with his personal finances.
• CNNMoney helps you stick with your financial diet with some strategies on how to avoid the risks of ditching your diet in 2010.
  
• What can be done in the next three months to get closer to my goals? Read all 4 questions you need to ask yourself to achieve your financial goals, brought to you by Gather Little By Little.
• Wall Street Journal suggests we try Christmas saving, not Christmas shopping, with some reasons to skip your next shopping trip.

Credit Reports & Credit Scores News

• The first of 9 steps for establishing credit is to establish credit relationships with banks and lenders. Read all the steps at Rich Credit Debt Loan’s blog.
• Herald Online answers the question, do credit scores matter in today’s world?
• Interested in loan modification but not sure what it will do to your credit? Check out No Debt Plan’s guide to loan modification and the affect on your credit score.
• MSNBC reports that the collapse in consumer credit may slow recovery.
• Ever wondered how many points it will cost you on your credit score if you maxed out your credit card? Or declared bankruptcy? Or had a late payment? ptMoney blogs credit score secrets revealed: FICO Negative Points.

If you’re in heavy credit card debt, the first thing you need to do is take stock of your financial situation and stop spending. You need to get yourself on a budget and stop the bleeding. Once you get that under control, the next step is to restructure your debts so you can make up lost ground. That’s where this post comes in.

The problem with credit card debt in particular is that the interest rate is always so high. We’re so used to seeing mortgage rates in the single digits that we forget that credit card interest rates are in double digits. Double digits! How is someone who has made spending mistakes going to recover if they need to pay 15-20% each year in interest?

They can’t. Once you’re on a budget and making regular payments, the next step is to lower the interest rate on your credit card debt. The answer, though, isn’t to go out and apply for low APR credit cards. That’s part of the answer, but that’s not step one.

Ask for A Lower Rate

Before you apply for a low interest rate credit card, try calling your current credit card issuer and asking for a lower APR. If you have been making regular on-time payments, there’s a possibility your credit card will just lower your interest rate. Since it costs you only your time to make the phone call to ask, I don’t see why you wouldn’t want to try this first. If they won’t budge, be persistent and say that you see better credit card offers available and you’re thinking about transferring your balance. The worst thing they can say is “no” and you lose nothing except a bit of time.

Consider Prosper, Lending Club

Peer to peer lending networks like Lending Club and Prosper are great places to try to get a loan if you have good credit. Both peer to peer lending networks require a fairly high FICO credit score (FICO 640+) and the loan funding process can take about a month, since investors are bidding down the interest rate on your loan, it’s an option if you have time. With average interest rates in the single digits, these are usually very attractive compared to the rates on credit card debt.

Another benefit, or drawback depending on your perspective, is that the loans are for three years so you will be finished in a set period of time. Finally, if you do get a loan, you don’t have to get one for the full amount of your debt. If you owe $5,000, you can always opt for a smaller loan, say $1,000, so that you can convert part of the credit card debt to something lower.

Apply for Low Interest Credit Cards

From here, you can start looking for cards that have a low APR and willing to let you do a balance transfer. I’d check this list of credit cards with 0% balance transfers to see if you can get a 1-2 punch of 0% APR for a year and then a low APR after the 0% promotional period.

If those don’t fit the bill, here are some cards that offer rates lower than the average (currently around 15-16%). The key is that you need the rate to be lower than your current rate. I don’t list the rates on this page because they are frequently changing but they will be listed in the card’s terms & conditions:

• Citi Forward – This card has a low variable interest rate pegged to the Wall Street Journal’s published prime rates and it has a special program that lowers your APR when you use credit wisely. If you make a purchase, stay under your credit limit, and pay on time for 3 billing cycles in a row, your interest rate will be reduced by 0.25%. You can get this benefit 8 times for a total of 2% reduction in your interest rate! You also get 6,000 ThankYou points after $250 in purchases within 3 months, 5,000 points when you sign up for paperless statements within 3 months, and a favorable points reward schedule without an annual fee,
• Chase Freedom Card – In addition to a low variable interest rate, they offer a 0% APR on purchases for up to 12 months as well as $50 cash back after your first purchase. The interest rate is pegged to the prime rate published in the Money Rates column of The Wall Street Journal two days before the statement closing date. No annual fee.
• Discover More Card – A low interest rate coupled with an introductory APR of 0% for six months on purchases and balance transfers. Discover’s interest rate is pegged to the Prime Rate published in The Wall Street Journal on the last day of the month. This card has no annual fee.
• Citi Platinum Select Card – The Citi Platinum SElect has a 0% APR for six months on purchases and balance transfers without an annual fee. Citi also uses the Prime Rate published in The Wall Street Journal two days before the statement/closing date.

So to recap, first you need to stop the accumulation of debt. After you’ve achieved that, which is no small feat, go to each of your cards and try to negotiate down the interest rate. After that, consider going to a peer to peer lending network to get a lower interest loan for part or all of your debt. Then, if you can’t get it lower that way, try a 0% balance transfer or transferring to a card with a lower rate. Keep in mind that cards will usually charge you a fee to transfer a balance, so the interest rate difference needs to take that into account.

Good luck!

(Photo: pumpkinjuice)

How To Get A Low Interest Rate APR on Credit Card Debt from personal finance blog Bargaineering.com.

In The Turnaround Letter, he suggests, “But what about some of the biggest, best known and best managed companies that are trading below where they were ten years ago? That’s pretty tempting.” Here, he looks at 8 stocks that still trade below their 1999 highs.

“Sure, late 1999 was the last gasp of the Internet bubble, and so that explains some of the tech names. But our list includes retail, beverage, entertainment, drug and other low-tech businesses.

“We can’t tell you exactly what is going to propel these stocks back to their former heights – if it were obvious, Wall Street would be all over these stocks and they wouldn’t still be in the doldrums – but we think many of them could be poised to rebound.

“Moreover, a number of them have generous dividends, so that you get paid while you wait. 

“Alcoa (NYSE: AA), as one of the world’s largest suppliers of aluminum, has faced substantial headwinds during the economic downturn. A slide in revenues began in the third quarter of 2007, but in the most recent quarter, the company returned to profitability.

“In addition to improving cyclical trends (such as better supply/inventory balances), Alcoa is benefiting from growing demand out of China. To be sure, the company will profit most from a broad-based economic recovery. But at current prices, there appears to be sufficient value to await the upturn.

“Coca-Cola (NYSE: KO) is perhaps the most widely recognized brand name worldwide. Some may think the fizz has gone out of the brand, but Coke’s steps in non-carbonated beverages, such as, Dasani water, Powerade sports drinks and Minute Maid juices are paying off.

“And even the core Coke product still has good potential in China and other international markets. 

“Disney (NYSE: DIS) is the consummate consumer discretionary company, including not only its resorts, movies and consumer products, but also its media outlets ESPN and ABC, which depend on consumer-focused advertising.

“Everyone is still wringing their hands about the prospects for consumer spending, but for patient investors Disney is a well managed company with strong brands and unmatched assets.

“Home Depot (NYSE: HD) pioneered the concept of home improvement superstores, and the stock rode a wave of popularity to P/E multiples in the 60s and 70s around the turn of the century.

“More recently, the company stumbled as it tried to fend off competition from Lowes and others. However, under CEO Frank Blake, who took over in 2007, the company seems to be getting back on track.

“Intel (NASDAQ: INTC) is the world’s largest maker of semiconductors. Despite strong competition, Intel has found a way to remain the technology leader in chips used from PCs and high- end servers to wireless communications and graphics.

“The whole sector has been weak for several years, but when the demand for tech products begins to pick up again, Intel will be one of the primary beneficiaries.

“Microsoft (NASDAQ: MSFT) may seem like a stodgy behemoth these days, but it is taking a number of steps to restore profit growth. The company is aggressively cutting costs at the same time as it is unveiling its latest operating system, Windows 7.

“In addition, it has opened its first retail store and is showing increased willingness to enter into strategic partnerships with others such as Yahoo and Nokia. We wouldn’t bet against Goliath in this battle.

“Pfizer (NYSE: PFE) just completed a $68 billion acquisition of Wyeth, a merger that will significantly expand Pfizer’s reach, both in terms of existing product offerings and new drug pipeline.

“Management expects $4 billion in synergy savings, and that is on top of a general $2 billion cost-reduction program already underway.

“While the entire healthcare sector has been weak as investors worry about what the politicians in Washington are up to, we believe that Pfizer is well positioned for sustained growth.

“Wal-Mart (NYSE: WMT) is the world’s largest retailer. Once you get to a certain size, your growth rate inevitably has to slow. But Wal-Mart has been diligent about focusing on new categories of merchandise where it quickly becomes a market leader, such as groceries, toys and electronics.

“While the stock has gone nowhere for ten years, the financial results have continued to improve – essentially growing into the stock price. While Wal-Mart may never again be a growth stock, it now looks like a very attractive value play.”