If you're feeling pain at the pump, one thing you might try is a credit card that offers rebates on gas purchases. But beware: this plastic comes equipped with plenty of fine print. Here's the skinny on some of the most popular cards.
The following post comes from partner site LowCards.com
As the average price of gas hovers around $4 per gallon and drivers are looking to save, gasoline credit cards can keep a little more money in your pocket.
This is a good time to shop around now that the summer driving season has begun. As you compare cards, pay attention to the fine print – because gas cards are more complicated, and potentially more expensive, than standard credit cards.
Gasoline cards can come in many varieties: prepaid cards or certificates, credit cards issued by gasoline companies, and cards issued by credit card companies. These cards use cash back, gift card, or fuel credit incentive programs that are based on the amount of purchases you make. Some cards offer significant benefits, but you have to understand the fine print.
“Like all reward cards, the benefits are a good deal only if you pay off your balance each month,” says Bill Hardekopf, CEO of LowCards.com and author of The Credit Card Guidebook. “Station-branded gas cards have some of the highest interest rates, which can range from 21 percent to 26.99 percent. If you carry a balance, these cash rewards are not worth the high rates.”
Gasoline company credit cards
Credit cards issued by specific gas companies like BP/Amoco, Shell, and Texaco offer large discounts for gas purchased from their stations. However, these cards typically have a much higher APR than bank-issued cards.
Pay attention to the details of the offer, because some companies give attractive incentives for the first few months, then change to a much lower rebate. Offers vary by card, so read the fine print to see if the incentive is cash back or fuel credits. Some companies will credit your account monthly, but some only redeem annually.
These cards offer some of the biggest savings to loyal customers who usually buy gas from one brand…
- The BP Visa – This card offers a 5 percent rebate for purchases made at participating locations. It also offers a double rebate for the first 60 days. BP Visa Rewards Card is issued through Chase and gives a 2 percent rebate for qualifying travel and restaurant purchases; it gives a 1 percent rebate on most all other purchases (except non-BP gasoline purchases). You can redeem your rewards in increments of $25. Unlike many rewards gasoline cards, you can redeem with BP gift cards, a check payable to you, or a donation to the BP Conservation Fund. The BP Visa APR ranges from 15.24 to 19.24 percent.
- The Shell Platinum MasterCard – This card offers rebates of 5 percent on Shell gas purchases and 0.5 percent rebates on all other purchases. The rebate is a fuel tax credit and is automatically credited to your Shell card for future gasoline purchases in $25 increments. It should be noted that Shell provides a maximum rebate per billing cycle of $20 ($240 per year). The APR for the Shell Platinum Select MasterCard is 23.99 percent.
- The Exxon/Mobil MasterCard – The fuel credit is 15 cents per gallon at Exxon/Mobil gas stations. There is a 2 percent rebate on your first $10,000 spent on other eligible purchases, and 1 percent on other eligible purchases over $10,000. The rebates are automatically credited to your card in $10 increments. You must make at least $10 in Exxon and/or Mobil gas purchases in a single billing cycle to redeem your rebates. The rebates are for future gasoline purchases at Exxon/Mobil stations. The APR for the Exxon/Mobil MasterCard is 24.99 percent.
- The Chevron/Texaco Visa – This card offers fuel credits of $0.30 cents per gallon for the first 60 days, then 10 cents per gallon and 3 percent fuel credits for non-gas purchases at Texaco/Chevron locations. In addition, you will receive 1 percent fuel credits for all non-fuel purchases. Chevron/Texaco has a maximum $300 annual fuel credit limit. These fuel credits are applied to future purchases of gasoline at Chevron/Texaco locations only. The APR for the Chevron and Texaco credit cards is 26.99 percent.
Gasoline rewards from credit card companies
Gasoline rewards from cards issued by credit card companies usually offer a wider range of benefits. These cards don’t require purchases at a specific gas station and give cash back on purchases other than gasoline. But these cards usually have some confusing terms and conditions that should be understood before applying for the card.
Some cards offer rotating programs that give higher gas rewards for only a specific time during the year. The rewards rotate by quarter and enrollment is not automatic. Many of these programs require you to sign up each quarter to receive the rewards, making rotating rewards programs harder to navigate.
A number of programs have a maximum benefit amount that you can earn per billing cycle. They may also have purchasing tiers, and full benefits may not begin until you reach the designated spending limit. Rewards are smaller until you reach the tier.
Most cards advertise that rewards don’t expire, but rewards can be forfeited for late payments, inactive accounts, or closed accounts. Some redemptions aren’t available until they reach a specified reward amount.
- Chase Freedom Visa Card – This card advertises a 5 percent cash back reward for certain categories of purchases each quarter. But you are limited to earning the 5 percent cash back on $1,500 in purchases each quarter, so there is a quarterly maximum cash back reward of $75 in these special categories. Consumers can earn 5 percent on gas purchases during the third quarter of 2011. The card also gives 1 percent cash back on all other purchases with no limit on the amount earned. This card currently has an extra incentive – new customers receive an additional $150 cash back bonus once they spend $500 during the first three months. There is no annual fee on this card.
- Discover Card Open Road – You receive a 2 percent reward on the first $250 of all eligible gasoline and restaurant purchases each billing period, or a maximum of $5. Gas or restaurant purchases over $250 during a billing period earn 1 percent. Gasoline purchases at warehouse clubs only earn 0.25 percent. Discover also sets a spending tier on earning cash back on other purchases. Consumers earn 0.25 percent for all other purchases until you spend a total of $3,000. Then, you earn a 1 percent reward on all other purchases. You can redeem awards in $20 increments. There is no limit on the amount of cash rewards earned with this card, and there is no annual fee. Plus, you receive a free $75 Restaurant.com gift certificate after first purchase.
- Capital One No Hassles Rewards Card – This card offers 2 percent cash back on purchases at gas stations and major grocery stores, and 1 percent back on all other purchases. The rewards can be redeemed in increments of $25, $50, $100, and $200. You can redeem upon request or set up an automatic redemption each year. Consumers can earn unlimited cash rewards that don’t expire. There is no annual fee with this card.
- True Earnings Card from Costco and American Express – True Earnings offers cash back awards of 3 percent for purchases of gasoline up to $3,000, and 1 percent on subsequent purchases. Cardholders also earn 3 percent cash back on restaurant purchases, 2 percent on travel-related purchases and 1 percent on all other transactions. The card only allows redemptions on an annual basis that is an in-store coupon redeemable for merchandise or cash at Costco only. There is no limit on the amount one can earn and no annual card fee for Costco members. Consumers also earn a $25 statement credit with their first purchase.
“Keep in mind that your account must remain open and current to redeem your rebates,” Hardekopf says. “Rewards can expire for some cards in only 12 billing cycles, and a late payment can wipe out the rewards for that billing period.”