Gas prices are a constant concern for many drivers, and finding ways to save at the pump can make a significant difference in your budget. One option to consider is a gas credit card. But is it worth it? Let's explore the benefits and potential drawbacks of using a gas credit card to help you decide if it's the right choice for you.
A gas credit card is a type of credit card specifically designed to offer rewards or discounts on fuel purchases. These cards can be branded by specific gas stations or be general rewards cards that provide cash back or points for gas purchases. For example, the ExxonMobil Smart Card offers 6 cents off each gallon of Synergy™ gasoline at Exxon and Mobil stations.
Benefits of Gas Credit Cards
Savings on Fuel: One of the primary benefits of a gas credit card is the potential savings on fuel. Many gas credit cards offer discounts per gallon, which can add up over time. For instance, the Shell Fuel Rewards Card offers 10 cents off per gallon for up to 35 gallons.
Easier Approval: Gas credit cards are often easier to obtain than traditional rewards cards, making them a good option for individuals with fair or poor credit. "Gas station credit cards are very similar to store credit cards — they’re often accepted at one particular gas station chain and are useless in any other store or for online shopping," says Alex Gerard, founder of CardsMix.com.
Credit Building: Using a gas credit card responsibly can help improve your credit score. By making timely payments and keeping your balance low, you can demonstrate good credit habits, which can positively impact your creditworthiness.
Tracking Fuel Expenses: Gas credit cards can help you track your fuel expenses separately, making it easier to budget. "Using a card like this can also help you track your fuel expenses separately, making it easier to budget," says David Bakke, credit expert at Money Crashers.
Drawbacks of Gas Credit Cards
High Interest Rates: Gas credit cards often come with higher interest rates compared to traditional credit cards. For example, the ExxonMobil Smart Card has an APR of 25.74% on purchases, which is significantly higher than the national average.
Limited Usability: Many gas credit cards are only accepted at specific gas stations, limiting their usability. This can be inconvenient if you frequently travel or if the branded gas station is not easily accessible.
Modest Rewards: While gas credit cards offer discounts, the savings can be relatively modest. For example, a 5-cent discount per gallon on a 15-gallon fill-up only saves 75 cents. In contrast, some general rewards cards offer higher cash back rates on gas purchases.
Gas Credit Cards vs. Regular Rewards Cards
When deciding between a gas credit card and a regular rewards card, consider your spending habits and financial goals. Regular rewards cards often offer more flexible rewards and higher cash back rates on a variety of purchases, including gas. For instance, the American Express Blue Cash Everyday card offers 3% cash back on up to $6,000 in annual gas purchases at U.S. gas stations.
However, if you have a poor credit history, a gas credit card may be easier to obtain and can help you build your credit. "If you don’t have any problems getting approved for traditional credit cards, you may find that general purpose credit cards with gas rewards offer a better value," Gerard says.
Gas credit cards can be a valuable tool for saving money on fuel, especially for those with fair or poor credit. They offer discounts on gas purchases, easier approval, and the opportunity to build credit. However, it's essential to consider the high interest rates and limited usability before applying. For those with good credit, a regular rewards card may offer better overall value. Ultimately, the best choice depends on your individual financial situation and spending habits.
