Nearly every day, we have to decide whether to use debit cards or credit cards for purchases. While on the surface there doesn't appear to be a lot of difference, a closer examination will find a number of advantages to using a credit card in some situations. In particular, at the gas pump.
Consumer protection is a huge factor. Recall the many stories you've heard of late about data breaches and subsequent consumer fraud. And 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 debit card.
What happens is that thieves will place skimmers on the gas pump card reader. Then they'll then set up somewhere near the gas station, waiting for people to use their debit cards and enter their PINs. All they'll need is a laptop with specific software and they'll be able to nab your PIN and use it to access your debit card account.
Most (but not all) credit cards offer their cardholders extra protection against identity theft compared to debit cards. 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 you'll receive when using credit for gas purchases. Here are some other benefits.
One of the best things about credit cards is that many offer cardholders some sort of reward for making purchases. These rewards come in the form of airline miles or hotel points, or it could simply be cash-back incentives. No matter what the reward is, the key is that you're gaining something in exchange for using the card. Very few debit cards offer that perk.
Making a purchase using a debit card means that the 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 you have to pay the bill. This can be very helpful in certain cash-strapped situations. Just make sure that you always pay your bill in full and don’t float the amount to the next billing period.
In addition to standard rewards you can earn by using most credit cards at the pump, there are a few cards in particular that offer bonus points on gas purchases. Here are some of them.
Blue Cash Preferred Card from American Express
If getting cash back is your thing, then you might want to consider 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 $150 statement credit after you spend $1,000 within the first three months after activating the card. That said, the card does have a $75 annual fee that isn’t waived in the first year.
BankAmericard Cash Rewards Visa Signature Card
Another option for a cash-back card is the BankAmericard Cash Rewards Visa Signature. You will receive 3% cash back on purchases at gas stations and 2% at grocery stores. Unlike the Blue Cash Preferred card, the Visa Signature Card has a limit of $1,500 in combined gas and grocery purchases for each quarter. Anything over that amount will receive only 1% back. The signup bonus for this card is a $100 statement credit after you spend $500 in the first 90 days. Another plus: no annual fee.
Citi ThankYou Premier Card
If you're a frequent traveler and earning travel rewards is essential, you might consider using for gas purchases the Citi ThankYou Preferred. In addition to earning 50,000 Citi ThankYou points after you spend $3,000 in the first three months of usage, you can earn three Citi ThankYou points on any travel purchase, which includes gas along with airfare and hotels. This card does have a $95 annual fee, but it’s waived for the first year.
PenFed Platinum Rewards Visa Signature Card
The PenFed Platinum Rewards Visa Signature card has a very lucrative reward for users, offering five points for every $1 spent on gas. The only drawback is that you don't get a signup bonus with the card. For some users that could be unappealing, but others will appreciate the card's $0 annual fee.
Purchasing gas with a credit card is, for many reasons, typically a superior choice than using debit. Not only does using credit provide a greater sense of security from possible fraud, but most credit cards offer cardholders some sort of reward for their use at the pump.