Paying for Gas With Debit Card vs. Credit Card: An Overview

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. Not only does using credit provide a greater sense of security from possible fraud, but most credit card companies also offer cardholders some sort of reward for using their cards for gas.

Key Takeaways

  • Debit cards offer immediate payment without interest charges; however, they leave you as the spender under considerably more risk than a credit card.
  • A credit card offers additional protection at the pump because the funds are not immediately withdrawn from your account.
  • Using a debit card for gas is risky, as credit thieves favor gas stations and might be able to access your account with your personal identification number (PIN) by using a device called a skimmer.
  • You may not receive the cash discount for paying with a debit card because many gas stations treat a debit transaction the same as a credit card, thereby charging a premium.

Using a Debit Card at Gas Stations

Using a debit card to pay for gas might immediately seem like the better option: You are avoiding interest fees associated with credit cards, and you are not able to overspend by using a debit card. However, accessing money instantaneously has drawbacks. The bigger issue with debit cards is your balance. If thieves acquire your debit card information and use it to steal, then your money is gone until you go through the process of getting it restored.

What’s more, although you may assume that you’ll be getting the cheaper “cash” price by not using a credit card, many gas stations actually treat a debit transaction as a credit card purchase and charge the premium.

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. Additionally, avoiding 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 a credit card.

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 can have as many as 25 days until the balance is due. This can be very helpful for managing cash flow in your personal finances.

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. You don’t want to be charged an extra 20% in interest to put gas in your car, but if you can’t pay off your balance each month, then you will incur interest at whatever your annual percentage rate (APR) may be. In the case of people who have problems controlling their spending, debit card purchases are a clear choice.

Top Credit Cards for Purchasing Gas

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

Blue Cash Preferred Card from American Express

If getting cash back is your thing, then you might want to consider the American Express Blue Cash Preferred Card. You will receive 3% cash back at U.S. gas stations, and there’s no limit on how much you can earn. Getting approved for the card will get you $150 after you spend $3,000 within the first six months, plus you can get 20% cash back on all Amazon purchases in the first six months up to $200. Both come in the form of a statement credit. This card has a $95 annual fee, waived for the first year, and a 0% APR for the first year.

Bank of America Customized Cash Rewards Credit Card

Another option for cash back is the Bank of America Customized Cash Rewards Credit Card. You will receive 3% cash back on purchases in the category of your choice: gas, online shopping, dining, travel, drugstores, or home improvement/furnishings. Obviously, choose gas. You also get 2% at grocery stores and wholesale clubs for the first $2,500 of purchases each quarter. After that, everything comes with a 1% reward. The sign-up bonus for this card is a $200 online cash rewards bonus after you spend $1,000 in the first 90 days. Another plus: no annual fee.

Citi Premier Card

If you’re a frequent traveler and earning travel rewards is essential, then you might consider using the Citi Premier Card for gas purchases. In addition to earning 60,000 Citi ThankYou bonus points after you spend $4,000 in the first three months of usage (redeemable for $600 in gift cards), you can earn three Citi ThankYou points for every dollar you spend on any travel purchase, which includes not only gas but also airfare, restaurants, hotels, and more. The card has a $95 annual fee.

PenFed Platinum Rewards Visa Signature Card

The PenFed Platinum Rewards Visa Signature Card offers a lucrative reward for users: five points for every $1 spent on gas. The only drawback is that you don’t get a sign-up bonus with the card. There’s another benefit, however: the card’s $0 annual fee. Of course, to get the card, you must first join PenFed Credit Union.

Special Considerations: Protection

Think about the many stories you’ve heard about data breaches and consumer fraud, then consider that gas stations are on the front line of this trend. The gas pump is one of the easiest places for fraudulent activity to occur against anyone using a card.

Debit and credit cards both have consumer protections that leave you free of liability 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 from three to 60 days after the transaction. Credit cards set your maximum liability at $50, and many advertise zero liability.