Debit vs. Credit Card: Paying for Gas

September 12, 2018 — 6:00 AM EDT

Which should you use for everyday purchases – a debit card or a credit card? It might not seem like there’s a lot of difference between those two options, but a closer examination reveals a number of advantages to using a credit card, especially at the gas pump. (For more see Credit vs. Debit Cards: Which Is Better?)

Risks at the Pump

Consumer protection is a huge issue. Think about the many stories you've heard about data breaches and consumer fraud. Then consider that gas stations are on the frontline of this trend. The gas pump is one of the easiest places for fraudulent activity to occur against anyone using a card.

Thieves can place skimmers on the gas pump card reader and set up near the gas station, waiting for people to pay with a credit or debit card. All they need is a laptop with specific software and they'll be able to nab your information and use it to access your account.

How You Are Protected

Debit and credit cards both have consumer protections leaving you liability-free for most transactions. However, you get a little less protection with a debit card if you don’t notice the fraudulent charges within two days. You could be on the hook for as much as $500 if you report the problem between three and 60 days after the transaction. Credit cards set your maximum liability at $50 and many advertise zero liability.

The bigger issue with debit cards is your balance. If thieves steal using your debit card, your money is gone until you go through the process of getting it restored. (Read How to Keep Your Debit Card Transactions Safe.) With a credit card, you might show a high balance but you haven’t lost any real money since it’s not directly pulling from your bank account. This makes a credit card feel safer than a debit card.

Benefits of Using a Credit Card at Gas Stations

Most (but not all) credit card companies offer their cardholders more protection against identity theft than is available to debit cardholders. This alone is a strong vote in favor of using your credit card at the gas pump. But identity theft protection isn’t the only benefit. Some credit cards offer rewards in the form of airline miles, hotel points or cash-back incentives. No matter what the reward, the key is that you're gaining something in exchange for using the card. Very few debit cards offer that perk.

In addition, there's the advantage of having a grace period with a credit card. When you make a purchase using a debit card, that amount is taken out of your checking account immediately. However, when you use a credit card to make your purchase, you usually will have a couple of weeks until the balance is due. This can be very helpful for managing cash flow in your personal finances.

4 Top Credit Cards for Purchasing Gas

In addition to the standard rewards you can earn by using a credit card at the pump, a few cards in particular offer bonus points on gas purchases. Here are four of them.

1. Blue Cash Preferred Card from American Express

If getting cash back is your thing, you might want to consider the American Express Blue Cash Preferred Card. You will receive 3% cash back on gasoline purchases and there's no limit on how much you can earn. Signing up for the card gets you a $200 statement credit after you spend $1,000 within the first three months after activating the card. That said, the card has a $95 annual fee that isn’t waived in the first year.

2. BankAmericard Cash Rewards Visa Signature Card

Another option for cash back is the BankAmericard Cash Rewards Visa Signature Card. You will receive 3% cash back on purchases at gas stations and 2% at grocery stores for the first $2,500 of purchases each quarter. After that, everything comes with a 1% reward. The signup bonus for this card is a $150 statement credit after you spend $500 in the first 90 days. Another plus: no annual fee.

3. Citi ThankYou Premier Card

If you're a frequent traveler and earning travel rewards is essential, you might consider using the Citi ThankYou Premier Card for gas purchases. In addition to earning 60,000 Citi ThankYou points after you spend $4,000 in the first three months of usage, you can earn three Citi ThankYou points for every dollar you spend on any travel purchase, which includes not only gas but airfare, car rentals, hotels and more. This card has a $95 annual fee, but it’s waived for the first year.

4. PenFed Platinum Rewards Visa Signature Card

The PenFed Platinum Rewards Visa Signature Card offers a very lucrative reward for users – five points for every $1 spent on gas. The only drawback is that you don't get a signup bonus with the card. There's another benefit, however: the card's $0 annual fee.

Beware Paying with Money You Don’t Have

When you pay with a credit card you’re putting yourself into debt, and debt is betting on your future ability to pay the money back. Some people are more disciplined and able to only charge what they can pay before the end of the month. Others have a hard time controlling credit card spending.

The key is to use your credit card like a debit card and only charge what you can pay at the end of the month without paying interest. You don’t want to pay an extra 20% in interest to put gas in your car. For people who have problems controlling their spending, debit card purchases are the clear choice.

The Bottom Line

For many reasons, it's typically better to purchase gas with a credit card instead of a debit card. Not only does using credit provide a greater sense of security from possible fraud, but most credit card companies offer cardholders some sort of reward for using their cards at the pump.