Credit Card Education Guide

Pump and Save at the Gas Station

The average credit card offer cash back or other rewards on your purchases even for people with less than perfect credit. The common reward is 1% cash back on all net purchases. You have probably heard of the record profits that have been recorded by the oil companies in the recent years, so it does not come as a surprise that to compete for market share they try to gain more customers by offering higher rewards for gas purchases.

The consumer can benefit from this by having a gas card in the wallet and remember to use it every time you are filling up the tank. You can save as much as 5% on every gallon of gas if you pay with your gas card. It works similar to a regular cash back program, but as with any reward program it is important to read the fine print to ensure you always earn the maximum rebate.

Two Types of Gas Cards

The most common type of gas card that is available to the consumer is a card offered directly from the oil company. It is usually advertised at every gas station that is owned by the specific oil company and a credit card application can be found either near the pump or inside the gas station. Not all gas cards in this category offer the same rebate and it is an advantage to pick up an application at other gas stations that you frequently pass every time you are driving to compare rewards and other details before applying for a gas card. The problem with this type of card is that you are limited to one brand of gasoline at one price. If the gas station across the street has a lower price you will lose the rebate by choosing the best price.

The other type of gas card is a generic card offered through a regular credit card provider. With this card you can choose any gas station and still earn a reward that is higher than for a standard purchase, however they are not able to fully compete with the other type of card, because it is not backed by an oil company, but you get the freedom to choose any gas station that you want and in the long run you may save more using this type of gas card.

Maximizing the Gas Rewards

Both of these cards can include a limit on the amount of gallons you can buy each month while still earning a rebate, which is mainly put in place to ensure that the gas card is not used for commercial use.

Some rebate offers sound too good to be true and you may be signing up for an introductory offer that is only valid for 90 days or less. Make sure that the ongoing rebates are competitive with other gas credit cards or the savings from the introductory offer could evaporate faster than a gallon of gas.

Paying off the balance at the end of the month is important to maintain the benefit of earning higher cash back. Maintaining a balance could result in the finance charges exceeding the rebates you have achieved with your card, because the average interest rate is not competitive with some of the low interest credit card offers available.

Redemption of rewards can include restrictions similar to other reward programs, but if you only use this for gas you could run into problems. Even though you are earning a higher rebate you are also spending a lot less on the card compared to the card where you charge all other expenses. If the card issuer has imposed a minimum redemption limit and also have an expiration date on the rewards earned, you may not reach this limit before the rewards have expired.