The only PenFed card giving rewards on groceries (Platinum) gives them as points, and they don't translate to 3% cash back. It costs 2,940 points to get a $25 gift card, and then you have to receive the gift card to spend it. I don't want to hassle with that. 3x points becomes 2.55% cash reward on groceries and you have to go through the hassle of receiving a gift card.
I was very disappointed in PenFed when they changed from cash back (direct credit on the account) to "points." When I called to complain, they offered to let me keep the cash back option, but only one one of the three categories; 5% on gas 3% on groceries and 2% on everything else (IIRC.) I was going to cancel the card, but I decided the 5% deal was too good to pass up so DW and I each put our PenFed card in our car, and only use it for fuel.
Not to disparage folks who enjoy traveling for "free" on points, but that's not for me. Points have no set value; they are worth what the company decides they're worth that day. It's impossible to comparison shop.
I don't like the hassle of having to shop from their catalog, or request a gift card. I have one CC which allows me to take my 2% as a direct credit to my account, although I'm a little peeved that I have to go on line each month and navigate through a few screens to do so.
My suspicion is that small CC companies like PenFed were sold this "points" system by a third party. A middleman who manages the whole thing for them and makes a profit doing so. Maybe PenFed gets a kick-back too, but for whatever reason, they thought it would be a good thing... for them.
But it's not a good thing for customers.
The worst part is, processing that cash back probably cost PenFed next to nothing. Just a batch job that was set to run on a schedule. To set up a "points" system requires relationships with other vendors, new web sites, printing gift cards, etc.
You know all that added expense is coming from somewhere. And you know it's not the CC company or the company who manages the points.
Still, people vote with their wallets. Apparently I'm in the minority in not finding the points game "fun."