Gas prices have skyrocketed since President Biden took office. Family budgets are being challenged each time we fill up our gas tanks.
As usual, millions of people are using their credit card to purchase their fuel. If you are using a card with enhanced rewards on gasoline purchases, it may ease a bit of the pain of filling up your tank.
Is it better to get a credit card from a specific gasoline company, or use a general cash back credit card?
Both of these types of cards can reward you with a certain amount of money back on each purchase. But before deciding which type of card is better for you, it is important to analyze the card’s fine print.
Gas Company Credit Cards
There are a handful of advantages to getting a card from a specific gasoline company. People with just average credit scores can usually be approved for these cards—unlike a number of general cash back cards—so they may present an opportunity for some consumers to build their credit. Also, there are typically no annual fees for these cards.
However, the drawbacks are can be significant. Credit cards from a specific gas company often have a higher APR than general cash back cards. If you carry a balance from one month to the next (which is never recommended), this can cost you substantially more money.
A further disadvantage to these cards is the limitation on rewards. You usually won’t get any rewards on your non-gasoline purchases. That alone is a huge drawback. 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 can’t find one of these stations when you need to fill up, you will likely not get any rewards on that transaction.
Many of these gas company credit cards advertise an eye-popping amount of money back per gallon. But if you read the fine print, this is usually only on a limited number of gallons. Then the cash back often reverts to a set amount of cents per gallon. It’s important to realize that the appeal of this set amount of cash back will decrease as the price of gas increases. Make sure you read the fine print on these, or any, credit card offers to analyze the attractiveness of the offer.
General Cash Back Cards
A substantial number of traditional rewards credit cards also offer fuel rewards, but work in a slightly different way. Instead of receiving pennies off your fill-up, you will receive a percentage of the amount you spend. As the price of gas increases, the amount you receive back follows that increase since it’s a percentage amount. Many general cash back cards will offer anywhere from 2% to 5% cash back on your gasoline purchases which is very appealing. But again, you must read the fine print.
Typically, that cash back percentage is capped at an annual spend. Once you exceed that amount of gasoline purchases, you generally will only receive 1% back on your gasoline transactions.
Depending on your credit score, these cards usually have a slightly lower APR than gasoline company cards. And you will receive rewards on everything you buy which can add up to a significant amount of money.
One Other Consideration
When it comes to gas rewards, one other type of card to consider is a card offered by a bulk retailer like Costco and Sam’s. These cards pay very attractive rewards on any gasoline purchase, even on transactions made at other gas stations. In addition, they offer some enhanced cash back on some other purchases. So if you are already a member of one of these stores, consider getting one of these cards to maximize the rewards on your fuel purchases.