Sure, gas prices are sky-high. But credit cards that give you cash back on gas might not be the best deal – because other rewards cards are offering even more these days.
If you always pay your credit card balance in full each month, congratulations. Instead of worrying about interest rates, you can focus on getting the most rewards from your card. While the high price of oil has made cash rebates for gasoline increasingly attractive, what if I told you many rewards card experts like myself don’t bother to carry a gasoline card? Here’s the truth about gasoline rebate credit cards…
1. The savings don’t compare to other rewards cards
Gasoline is expensive, but how much do you really pay? A person driving 10,000 miles a year with a car that gets 20 mpg will consume 500 gallons. Even at $4 per gallon, the $2,000 annual gas bill will only return $60 a year from using a card that returns 3 percent cash back, such as the Gulf MasterCard. While these numbers might vary based on your car’s fuel efficiency and the miles you drive, there’s rarely more than a $100 a year at stake. Even that amount doesn’t represent a true savings when compared to other cash-back cards that don’t offer a special deal on gas purchases. For example, all purchases with Capital One’s Venture Rewards card earns 2 percent cash back in the form of a statement credit toward any travel expense at all – which makes the savings from a gas card even less significant.
2. Gas retailers want you to ignore competitors
A funny thing happens to people who receive a credit card from their local gas station: All of a sudden, they no longer notice better prices at their competitors, just so they can get their cash back for the brand that issued their card. Gasoline prices fluctuate so quickly that it’s impossible to predict who will have the best price any given day. So it’s unlikely that your gas card will always offer the best price, even when you factor in your cash-back rebate.
3. Cash-back offers often exclude the best deals
American Express offers cards (such as its Blue Cash Preferred) that offer a 3-percent rebate on gasoline – but only when purchased from a stand-alone station. This excludes superstores like Costco and Sam’s Club, where gas is often more than 3 percent less than at neighboring stations.
4. Gas cards have poor sign-up bonuses– if any
In a world where several credit card issuers are offering sign-up bonuses of $500 and even more, why waste your time applying for a card that offers little if any initial cash back? The paltry savings on gasoline over a traditional cash-back card would take years to make up for the wasted opportunity of receiving two free flights. (See The 5 Best Credit Card Sign-Up Bonuses for details.)
5. Gas cards are just another bill to pay
I suppose it’s possible to save some money by using a particular card for each kind of expense you have. You can have a wallet full of gas cards, grocery cards, travel cards, and so forth. But where does it end? Pick two or three of the best deals out there and use just those cards. Creating more work for yourself invites potential errors – like forgetting to pay a bill – that easily can wipe out your small savings.
Prices at the pump are painful, but fuel cards are probably not the ideal solution for all but the biggest gas guzzlers. Find a rewards card that fits your lifestyle at the Money Talks News credit card search tool, which objectively breaks down rewards, interest rates, sign-up bonuses, and annual fees.