Why Get a Gas Credit Card?

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. Though we may grumble as we fill our tanks and realize how much it’s going to cost us, the average household spends between $2,000 and $3,000 on gas every year.

Not surprisingly, credit card issuers would like a piece of that, and 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.

In fact, they’ll often give you more cash back on your gas purchases, typically 2 or 3%, than on the other things you buy, which may be limited to 1%. The advantage of these kinds of rewards cards is that you can get cash back on all kinds of purchases, not just gasoline. You also aren’t restricted to a particular brand of gas. 

The other major type of gas credit cards includes those issued by the oil companies themselves, 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. Exxon Mobil and Shell, for example, were each offering five different cards recently, 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 5 or 6, off each gallon of gas you buy at their stations. 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.

Should you make room in your wallet for a gas credit card? And, if so, which type? The general rewards cards will usually be a better deal for most consumers since they provide cash back at many places besides the gas station. Plus, they tend to be more generous. A rewards card that offers 3% cash back on gasoline will return 9 cents on a $3 gallon of gas, while the oil company card may pay just 5 or 6 cents a gallon.

However, if you have trouble qualifying for a more generous rewards card, an oil-company card could be an option. “Traditionally gas and retail cards have been easier to get than bank cards,” says Gerri Detweiler, education director for Nav. “They want your business.”

Also, Detweiler points out, an oil-company card might have a lower credit limit than many other cards, making you less of a risk in the eyes of the issuer. Still, she says, “If you have good credit, there’s no reason not to get a card that’s more flexible.”

Whichever type of gas card you choose, read the fine print. Some cards, for example, will 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.

Finally, note that the best way to save on gas may 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 harder to get – than an oil-company card. Paying cash could save you even more at some gas stations.