Best Gas Credit Cards
- What is a gas credit card?
- How Do Gasoline Credit Cards Work?
- Who Should Get a Gas Credit Card?
- Gas Credit Cards vs. Gas Reward Credit Cards
- What are the best Gas Credit Cards?
- How to Pick the Best Gas Rewards Card for You?
- Pros and Cons of a Gas Credit Card
There are two different types of gas credit cards that provide rewards or cash back on purchases of gasoline. There are gas credit cards that only allow you to purchase gasoline as well as, credit cards that provide rewards based on the value of the gasoline you purchase. Gas credit cards that are issued by an oil company (in conjunction with a bank or financial institution) usually only allow you to make purchases at their company, while a reward card that has a gasoline program allows you to purchase any item, and provide rewards or cash back for gasoline purchases. While you might think that an oil company such as BP or Chevron would provide the best incentives to purchase gasoline using a credit card, the rebates that you receive from general credit cards that have cash back rewards when you purchase gasoline are the more lucrative reward.
What is a gas credit card?
A gas credit card is a credit card either issued by an oil company. There are also gasoline reward credit cards that provide rewards or cash back when you purchase gasoline. Some gas credit card does not prohibit you from purchasing items other than gasoline, but your rewards are specifically based on the volume or value of gasoline that you purchase. Gas credit cards that only allow you to purchase gasoline are restrictive but, in many instances, it is easier to apply for these cards and they often take applicants that have fair credit.
For example, with the BP Credit Card, which is issued in conjunction with Synchrony Bank, you can receive 6-cents off per gallon and earn reward points when you purchase gasoline. You can apply for a gasoline credit card at a station or online, and many of these cards allow you to choose a billing date that is convenient for you.
How Do Gasoline Credit Cards Work?
Gas credit cards offer rewards or discounts when you purchase fuel at a specific gas company. For example, the ExxonMobil Smart card offers a 6-cent per gallon discount if you purchase gasoline at any ExxonMobile. This card is restrictive as you cannot purchase items other than gasoline. It also has a very hefty interest rate and charges customers 25.99% for balances. This is nearly 10% higher than the national average for interest on a credit card. Prior to applying for a gas credit card, you should make sure the card you choose is easily accessible and fits your lifestyle.
You should also check the terms and conditions prior to applying for a gas credit card, to see if there are additional fees if you pay at the pump. In some cases, this might offset the benefits you receive by using the card for a gasoline purchase. You should also keep in mind that some gas stations offer discounts if you purchase gasoline using cash as opposed to a credit card. Additionally, some gas credit cards will cap the number of gallons where you can receive a discount.
Who Should Get a Gas Credit Card?
While gas credit cards can save you money when you purchase a gasoline, a gas rewards credit card have better flexibility. Unlike gas credit cards, which are distributed by gas stations, gas rewards credit cards are traditional credit cards that provide rewards based on purchases of gasoline.
The question of whether you should make room in your wallet for a gasoline credit card is based on your lifestyle and spending habits, as well as your credit score. A gas credit card that is issued by an oil company generally offers 5-6 cents per gallon and usually has no fee. The benefit is that if you have fair or in some cases poor credit you still can qualify for a card issued by an oil company. If you have trouble qualifying for a traditional rewards credit card, then a gas credit card might be a good solution.
You should only apply for a gas credit card if you purchase gasoline on a regular basis. If you don’t drive a car, or you don’t take a carpool to work and share in the cost of gasoline, a gas credit card is a waste of time.
If you generally do not pay off your balances on time, then a gas credit card can be very onerous. With interest rates averaging near 25%, running a balance could quickly eliminate any benefit you might receive from purchasing gasoline.
For example, if you purchase $100 per week of gasoline, at $3 per gallon, and you can save 6-cents per gallon on your purchases, you would save approximately $1.98 per week or slightly less than $8 per month. If you were not able to pay off your balance after the month and you were charged a financing interest rate for holding a balance of $400 dollar (4-weeks multiplied by $100 per week), you financing charge on $400 at 25% per year (or approximately 2% per month), is $8, which would wipe out the benefit of purchasing gasoline for the entire month.
Additionally, if you have a business that relies on transportation, such as a moving company, a shipping company or a trucking company, a gas credit card might a good solution for you. Many gas credit cards provide features for businesses, including budgeting through their website. You should company the benefits you receive from a gas credit card to a generic gas rewards card before you pull the trigger.
Gas Credit Cards vs. Gas Reward Credit Cards
The choice of which credit card you should apply for is a matter of preference, but if you have good to great credit, a general credit card that provides gasoline rewards is generally a better deal. If I do not have a good credit rating, then you need to find a gas credit card that allows you to purchase gasoline at any station, and provides robust rewards.
Generally, general credit cards that provide rewards or cash back for gasoline purchases provide 3-5% of the purchase value. That equates to 9-15 cents cash back or reward at $3 per gallon. Additionally, these credit cards allow you to make purchases other than gasoline, which provides you with flexibility.
What are the best Gas Credit Cards?
The most lucrative gas credit card which provides the highest return on your purchase is the PenFed Ultimate Cash Rewards Visa Credit card. This card pays 5% cash back on unlimited purchases of gasoline but has 2-requirements you need to fulfill to receive your rewards. The requirements for eligibility are that you’ll have to be a member of the Pentagon Federal Credit Union. To join you need to make a donation of less than $20 to the National Military Family Association or the Voices of America’s Troops, volunteer work for the Red Cross. You will also need to keep a checking account with at least $250 balance and direct deposit, a money market savings account, or credit product at PenFed. There is no annual for this credit card.
American Express Blue Cash Preferred Credit Card – This credit card provides unlimited 3% cash back on all-gasoline purchases throughout the United States. There are many credit cards that cap your cash back which makes this card advantageous. There is a signup bonus that is worth $150 if you spend $1,000 during the first 3-months, but there is also an annual fee of $95 per card. American Express offers zero percent on during the first 12-months but has late fees, foreign transaction fees and balance transfer fees that can offset some of the benefits.
The Bank of America BankAmericard also provides 3% cash back, but they cap the number of rewards you can receive at $2,500. They also provide you with 2% on supermarket purchases and 1% on all other purchases. There is also no annual fee for this credit card. You can earn $100 cash rewards bonus after spending $500 in the first 90 days, and a 10% relationship bonus for Bank of America checking or savings accounts.
How to Pick the Best Gas Rewards Card for You?
This process is based on your credit score and your ability to apply for a general credit card rather than a gas credit card. If your credit is good to great, your better served finding a gas credit card that provides you with the flexibility to spend on other items and earn rewards other than for purchases of gasoline.
You also need to determine if gasoline is a significant monthly expense and if it is worth it to you to apply for a credit card that might have a high-interest rate. Again, some of the general credit cards that provide gasoline as a category where you can receive cash back, have zero-percent financing for up to a year. You also want to determine if you generate the best opportunity for yourself by paying with a credit card as opposed to cash. Many gasoline stations offer heavy discounts for cash that is larger than the 2-3% that they pay for a credit card transaction. If the gasoline station you normally go to provides a significant discount then a gas credit card might not be a prudent tool.
You also want to find a card that provides a supplemental category that will allow you to receive bonus rewards. For example, many gas cards provide cash back or rewards for supermarkets, and some give you 1% cash back on all purchases.
Pros and Cons of a Gas Credit Card
The largest benefit you receive from using a gas credit card is the discount you receive from purchasing gasoline. The most lucrative will offer cash back as much as 5% on your gas purchases which are approximately 15-cents per gallon with gasoline prices at $3 per gallon. This can be a major advantage for your monthly budget.
Along with offering your cash back on gasoline purchases, several gas credit cards have reward programs especially general credit cards that provide gasoline as one of the categories where you can receive rewards or cash back. This can include a reward as a percent of items other than gasoline. These rewards can be used for merchandise or travel, and in some cases even cash back.
It’s definitely more convenient to pay 1-payment for your gas credit card than multiple cash payments throughout the month.
The interest rate that is charged on some gas credit cards is some of the highest in the industry. This is one of the biggest drawbacks, and can quickly erode your rewards if you carry a balance. Some of the gas credit cards are as high as 29.9%.
Additionally, if you run a monthly budget you can run into problems if you don’t account for your monthly payment. When you use a credit card as opposed to cash or a debit card, you might forget to jot down the amount you owe, which could then come back to haunt you at the end of the month. This has caused people to overspend and not realize they are creating an issue for themselves until it is too late.
Learn More about Credit Cards
Gas cards are similar to regular credit cards as you can use them for purchases an pay all or part of your balance at the end of the month. There are differences that you should take note of, especially relative to general credit cards that provide gasoline as a category where you can receive cash back or requires. The most important difference is where you can use as credit cards.
A gas credit card that is strictly for gasoline purchase is usually good for customers who are looking to build up their credit score. Oil companies that issue credit cards are willing to issue a credit to customers who have fair or even poor credit, but you need to carefully evaluate the rates which can be sky high. Before you apply, you should weight the pros and cons and determine if a gas credit card is right for you.