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When Gas Credit Cards Aren’t Worth It

*Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through a credit card issuer partnership.

This article was last updated Aug 10, 2015, but some terms and conditions may have changed or are no longer available. For the most accurate and up to date information please consult the terms and conditions found on the issuer website.

If you carry a gasoline-branded credit card such as those offered by major gas companies like Exxon Mobile, Marathon, or Shell, you can qualify for attractive discounts at the pump. But the rewards programs on credit cards that are co-branded with gas stations can vary greatly from the programs of traditional rewards credit cards. The language can get a bit confusing when trying to differentiate between the two, so it’s important to recognize the difference before you sign up.

Per-Gallon Discounts

The main thing that most cardholders don’t pay attention to is that the value of their gas rewards will fluctuate. Depending on how high or low gas prices go, a gas rewards card can be either very lucrative, or a big waste of time. If your gas card offers you 5 cents off per gallon of gas you buy, your savings will hold more value when the prices are low. But when gas prices are high, your savings won’t be as valuable.

For example, if the price of gas is $4 per gallon, a 5-cent per gallon discount means you pay $3.95 per gallon – a total discount of 1.25%. When gas is selling for $2 per gallon, however, a discount of 5-cents per gallon means you pay $1.95 per gallon- a discount of 2.5%. You’re now earning twice as much cash back as you would if gas was at $4 per gallon. Given that gas prices historically go up over time, you’d probably be better off with a traditional cash back card that gives you a consistent percentage of cash back that you know you can count on

Rates and Limits

Most gasoline-branded cards do not charge an annual fee, but they usually charge considerably higher interest rates. That rate may be as much as 10% higher than what you might pay on a regular credit card, so if you tend to carry a balance from month to month, we’d recommend staying away from a gas card and sticking with a low interest credit card like the Citi Simplicity® Card - No Late Fees Ever.

As with any rewards card, you also need to study the fine print to find out if there are any limitations on how much you can earn in cash back rewards. There may also be limits on how much gas you can buy or how many dollars you can spend on gas in a particular period of time such as a month or 3-month quarterly period. Our infographic on racking up credit card rewards is a helpful resource for understanding how credit card rewards work.

Keep in mind that it doesn’t make sense to carry a balance with a rewards credit card. By carrying a balance from month to month, you will be charged interest, which is many times greater than any percentage you might hope to earn as cash back. When using any card, whether it is a gasoline-branded card or a regular credit card like the Chase Freedom® or Blue Cash Preferred® Card from American Express, the trick is to pay off your balance each month before the due date.

Better Options for Credit Cards with Gas Perks

In most cases, a co-branded gas rewards credit card will not be able to compete toe-to-toe with a credit card that comes with a rewards program that earns cash back on all purchases. Instead of shopping for a gas card, you are probably going to come out ahead using a different kind of rewards card that offers high-octane cash back.

The Discover It® and Chase Freedom® credit card each offer bonus cash back in rotating categories. Rewards cards with rotating categories that include gas purchases are typically earned during periods when consumers are buying more gas, such as the summer months or around the holidays.

Both of these cash back credit cards come with no annual fee and bonus cash back, which is much better than anything you’ll find with a co-branded gas rewards card. The down side to carrying a card that earns rewards during 3 months out of the year is that you’ll be stuck earning just 1% cash back on gas for the other nine months.

The Bank of America® Cash Rewards Credit Card is a great option for earning gas rewards if you’re looking for a credit card with a $0 annual fee. It offers 1% cash back on every purchase, 2% at grocery stores and wholesale clubs, and 3% on gas for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter. You’ll also earn a $150 online cash rewards bonus after you spend at least $500 on purchases in the first 90 days of account opening.

With the Blue Cash Preferred® Card from American Express you earn 6% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%). 3% cash back at U.S. gas stations and at select U.S. department stores. 1% cash back on other purchases. This is hands down the highest rewards rate we’ve seen for gas purchases. This card comes with an annual fee of $95 but you can negate that fee for a year by earning a $200 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months.

Have a Vehicle Fleet?

As you can see by the information explained above, the rewards earned on a gas-branded card typically won’t beat what you can get from other cards that come with gas rewards. Of course if you have a fleet of commercial vehicles or need to track the gas expenses of multiple drivers, a gas card may offer accounting options that are valuable to you.

Having said that, though, there are also business credit cards that aren’t affiliated with a gas company that offer special accounting tools – and many of them are much more useful and sophisticated than you’ll get with a typical gasoline card.

* Editorial Note: This content is not provided or commissioned by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed bythe credit card issuer. This site may be compensated through the credit card issuer Affiliate Program.

*The content in this article is accurate at the publishing date, and may be subject to changes per the card issuer.

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