Americans pump nearly 370 million gallons of gasoline on an average day—more than a gallon for every man, woman, and child in the nation, according to the U.S. Energy Information Administration. If you drive a gasoline-powered vehicle, one way to make your share of those gallons a little cheaper is to apply for a gas credit card. Alternatively, you could use a regular credit card that offers cash back or other rewards for purchases. This article looks at both options.
- Oil companies offer gas credit cards that provide a discount on the price of gas, often 5 or 6 cents a gallon, but sometimes much higher.
- Gas credit cards are branded with the name of a particular oil company and issued in partnership with banks.
- Credit card companies also offer regular credit cards that pay cash back or other rewards on most purchases, including gasoline, typically worth at least 1% of the amount you spend.
Regular Rewards Cards With Cash Back on Gas
Not surprisingly, banks and other credit card issuers would like a piece of all the money that consumers spend on gasoline, which is why many of them offer incentives for using their card at the pump.
Many rewards credit cards offer a certain amount of cash back, often at least 1% or 2%, on virtually everything you purchase with them, including gasoline.
Other cards have different tiers of rewards depending on the type of purchase. Among those, some single out gasoline purchases for a higher level of rewards. For example, the American Express Blue Cash Everyday card was recently offering 3% cash back on up to $6,000 in annual gas purchases at U.S. gas stations and 1% after that, as well as 1% on other purchases and 3% on supermarket and online purchases (again up to $6,000 limits).
In addition to providing cash back on virtually all of your purchases, regular rewards cards don't restrict you to a particular brand of gas.
Gas Credit Cards From Oil Companies
Gas credit cards are issued by oil companies in partnership with a bank. Most, if not all, major oil companies offer them, and some have more cards to choose from than grades of gasoline. For example, Shell has multiple cards for both regular consumers and businesses with a fleet of vehicles.
Gas credit cards offer a certain number of cents off each gallon of gas you buy at their stations, historically at least 5 or 6 cents per gallon but sometimes considerably higher. For example, the ExxonMobil Smart Card+ was recently offering 10 or 12 cents per gallon (depending on the grade of gas) and up to 42 cents per gallon for the first two months for new cardholders.
Similarly, the Shell Fuel Rewards Card was recently offering 10 cents off per gallon (for up to 35 gallons) as well as 30 cents off per gallon on new cardholders' first five fuel purchases (also up to 35 gallons).
So, for example, if regular gasoline is selling for $3.50 a gallon, that 10 cents off per gallon would represent a savings of about 2.9%.
Some gas credit cards also offer cash back at their stations' convenience stores and on other travel expenses, such as car rentals, airlines, and hotels. They generally have no annual fees, but their interest rates can be high compared with other types of cards, often in excess of 20%.
Gas cards differ in terms of where you can use them. Some limit you to purchases at their own participating gas stations, while others (typically co-branded with a network logo such as MasterCard or Visa) can be used anywhere within that network.
Choosing between a gas credit card and a regular rewards card isn't an either/or decision. There's no reason that you can't have both types if you qualify and can find room for them in your wallet.
Which Type Is Better?
Whether a regular or gas credit card will be better for you depends largely on how much gasoline you buy each month and whether you tend to patronize a particular brand. If you typically spend far more money at grocery stores and restaurants, for example, you might opt for a regular rewards credit card with generous cash back in those categories and reasonable cash back for other kinds of purchases.
If you have a spotty or poor credit history, gas credit cards might be easier to obtain than a regular credit card. Using a gas credit card and making timely payments on it could help you eventually qualify for a regular rewards card.
Also bear in mind that gas credit cards often have higher interest rates than regular cards—an important consideration if you can't pay your balance in full each month. With either a gas or regular rewards card, your interest charges could easily wipe out any money you're saving on gas, and then some.
Finally, note that the best way to save on gas might be by not using a credit card at all. Some stations will give you an even bigger discount if you pay with cash instead. It's also worth shopping around. If one gas station is charging $3.50 a gallon, and another down the block is charging $3.25, you'll save 7% right off the bat just by going to the cheaper one.
Will a Gas Credit Card Help Your Credit Score?
Having a gas credit card can help your credit score if you consistently pay your bill on time. Opening too many credit cards at once, however, can lower your score, though only briefly.
In addition, taking on another card (gas or otherwise) can improve your credit utilization ratio. That's the amount of debt you have at any given time compared to the amount of credit you have available to you. In terms of your credit score, the lower your credit utilization ratio, the better.
Do Debit Cards Offer Rewards for Gas Purchases?
Some debit cards now offer cash back on all or most of your purchases, typically 1%.
Is It Better to Use a Credit Card or a Debit Card to Buy Gas?
You are likely to get at least as much cash back with a rewards credit card as with a cash-back debit card, and often a lot more. And while credit cards and debit cards can both be vulnerable to skimming by criminals at the gas pump, a credit card provides you with more consumer protections if it happens to you.
A gas credit card can save you some money on your gasoline purchases, and it may be easier to be approved for than a regular rewards card. However, a regular rewards card is usually an all-around better deal if you qualify for one.