Americans pump nearly 392 million gallons of gasoline on an average day—more than a gallon for every man, woman, and child in the country, according to the U.S. Energy Information Administration. As the price of gasoline fluctuates, so does the cost of filling the tank each week. As a result, oil and gas companies offer gas credit cards as a way to provide a discount on the price of gas. Consumers also can use a regular credit card that offers cash back or rewards for purchases. Although the various cards available are similar, they have distinct differences between them.
- Oil and gas companies offer gas credit cards as a way to provide a discount on the price of gas.
- Gas credit cards are issued in partnership with a bank, which might offer a discount in the price of gas by five or six cents off each gallon.
- Credit card companies also offer cards that pay consumers cash back for purchases, including gasoline, which can range from 2% to 3%.
Rewards Cards With Cash Back
Not surprisingly, credit card issuers are interested in a piece of all those consumer purchases at gas stations, which is why many offer incentives for you to use their card at the pump. For example, many of the rewards cards issued by major banks and bearing the familiar logos of Mastercard and Visa now provide cash back on gasoline.
Typically, you'll receive more cash back from your gasoline purchases, which can range from 2% to 3%, than on other purchases, which could be limited to 1%. One of the benefits of rewards cards is that you can get cash back on all kinds of purchases, not just gasoline. Also, you're not restricted to a particular brand of gas.
Gas credit cards are also issued by oil companies, often 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 typically offers multiple cards, two for regular consumers, and three for businesses that own multiple vehicles.
The oil-company cards typically reward you with a certain number of cents, such as five or six cents, off each gallon of gas you buy at their stations. For example, Exxon offers six cents off each gallon of gas and has offered a 10-cent discount for the first two months for new cardholders.
Some also offer cash back 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%. In some cases, the cards can only be used at the gas station.
Which Type Is Better?
It's important to remember that whether you apply for a traditional credit card or a gas credit card, they are both issued by a bank. The oil and gas companies are not actually issuing the card. Instead, they're partnering with a financial institution to offer their clients a credit card with various benefits in hopes that they can create loyal customers who will purchase their brand of gasoline.
Whether a traditional or gas credit card is the better option may depend on how much in purchases will be made in gasoline versus other goods. Also, gas cards tend to offer a sign-up bonus in which there's an additional discount or more rewards offered within the first few months or up to a specific purchase amount.
Gas Credit Cards
For example, Exxon Mobil offers six cents per gallon, which works out to a 3% savings based on a gas price of $2.00 per gallon. The card also offers an additional 24-cent bonus discount for new customers on gas purchases within the first two months. The bonus discount is paid as a statement credit after the qualifying purchases are made within two months of the accounting opening date. If you have a long commute, 30 cents in discounts for the first two months and six cents thereafter can add up over time.
Shell offers a fuel rewards card—meaning gas purchases only—and a gas credit card via Mastercard, which can be also used as a credit card for other purchases. Shell offers a 30 cent per gallon discount for the first five fill-ups and 10 cents per gallon discount thereafter. Both cards also offer 10% on the first $1,200 spent in the first year.
The Shell Mastercard offers an additional 2% rebate for the first $10,000 spent at Shell stations and a 1% rebate for other purchases thereafter at Shell locations. However, purchases made at locations that sell non-Shell gas are not considered qualifying purchases, meaning you won't earn any rebates on those purchases.
Credit Cards with Cash Back
Credit cards like Capital One offer 1.5% cash back on all purchases without any restrictions.For those with no credit history or bad credit, they can opt for the secured credit card from Bank of America, which is easier to get approved since it requires a security deposit of $300 (maximum of $4,900) to open the account.
The Bank of America card offers 3% cash back in one of the following categories of your choice: gas, dining, online shopping, drug stores, travel, or home improvement and furnishings. You can change that category via their mobile app. You'll get 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases.
Which Is Better?
Whether a traditional or gas credit card is better will probably depend on how much money is spent on gasoline each month. The gas credit cards typically offer a higher cash back rebate for gas purchases but a lower rebate for purchases in other places, such as supermarkets and restaurants. If you find you'll be making far more purchases at grocery stores and restaurants versus gasoline, you might opt for a traditional credit card with a consistent, cash back feature and no restrictions on the types of purchases. However, if you travel a lot or have a long commute, a gas credit card might be a good option.
If you have a spotty or poor credit history, gas credit cards might be easier to obtain than a bank credit card. However, most gas credit cards are offered by banks that use the same information from your credit report that the traditional banks use when making a credit decision. Although you might get approved for a gas credit card even with poor credit, the bank may offer a lower credit limit to help reduce the bank's risk of nonpayment or default. Another option for those with poor credit is a secured credit card with a cash back feature as long as you have a few hundred dollars that can be used as a security deposit.
Whichever type of gas card you choose, read the fine print. Some cards might limit your discount to a certain number of gallons, making them less attractive if you buy a lot of gas. Also, bear in mind that if you don’t pay off your balance each month, your interest charges could easily wipe out any money you’re saving on gas—and then some. Also, some cards charge an annual fee.
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.
A general rewards card that offers cash back on gas is often a better deal—though could be harder to get, depending on your credit history—than an oil-company card. A general credit card will likely pay more rewards for non-gas purchases, but if you drive a lot, a gas credit card might be worth it. Also, paying cash could save you even more at some gas stations.