Credit card rewards can cut sky-high gas prices a bit
Gas prices have skyrocketed since President Biden took office. Family budgets are tested every time we fill our gas tanks.
As usual, millions of people are using their credit cards to buy their fuel. If you are using a card with gasoline purchase rewardsit may take some of the pain out of filling your tank.
Is it better to get a credit card from a specific gas company or use a general cash back credit card?
These two types of cards can reward you with a certain amount of money on each purchase. But before deciding which type of card is right for you, it’s important to analyze the fine print of the card.
Gas company credit cards
There are a handful of benefits to getting a card from a specific gas company. Individuals with fair average credit ratings can generally be approved for these cards, unlike a number of general cashback cards, so they may present an opportunity for some consumers to increase their credit. Also, there is usually no annual fee for these cards.
However, the downsides can be significant. Credit cards from a specific gas company often have a higher APR than general rebate cards. If you carry over a balance from month to month (which is never recommended), it can cost you a lot more.
Another disadvantage of these cards is the limitation of rewards. You generally won’t get any rewards on your non-gas purchases. That alone is a huge downside. But you’ll often only get rewards on your gas purchases at that specific brand of gas station. So if you have a Shell card and you can’t find one of these stations when you need to fill up, you probably won’t get any rewards on that transaction.
Many of these gas company credit cards advertise an incredible amount of money per gallon. But if you read the fine print, it’s usually only for a limited number of gallons. Then the cash back often amounts to a fixed amount of cents per gallon. It is important to realize that the appeal of this fixed amount of cash back will diminish as the price of gas increases. Be sure to read the fine print of these credit card offers, or any other offers, to analyze the attractiveness of the offer.
General Cash Back Cards
A significant number of traditional rewards credit cards also offer fuel rewards, but work in a slightly different way. Instead of receiving pennies on your fill, you will receive a percentage of the amount you spend. As the price of gasoline increases, the amount you receive back follows that increase since it is a percentage. Many general cash back cards offer between 2% and 5% cash back on your gas purchases, which is very attractive. But again, you have to read the fine print.
Typically, this cash back percentage is capped at an annual spend. Once you exceed this amount of gas purchases, you will typically only receive 1% back on your gas transactions.
Depending on your credit score, these cards usually have a slightly lower APR than gas company cards. And you’ll receive rewards on everything you buy, which can be a significant sum of money.
When it comes to gas rewards, another type of card to consider is a card offered by a bulk retailer like Costco and Sam’s. These cards offer very attractive rewards on any gas purchase, even on transactions made at other gas stations. Also, they offer enhanced cash back on select other purchases. So if you are already a member of one of these stores, consider getting one of these cards to maximize rewards on your fuel purchases.