You’ve likely seen advertisements for gas credit cards when you go to fill up at the pump. They promise to save you cash on gas – an offer that might be particularly tempting when you’re paying more than you expected for a tank of gas.
But are gas credit cards too good to be true? Is there another credit card that will offer you even better savings?
Here are 4 reasons why a gas credit card might not be the right choice for you.
Saving Pennies Per Gallon is Peanuts
Most gas credit cards give you a discount of a few cents per gallon. It sounds like a lot, but when you add it up – it’s not.
You can easily see this if you do a quick calculation. Let’s say that gas is $2.00 per gallon and you’re able to save 5 cents per gallon if you pay with a gas credit card. If you buy 400 gallons of gas per year, you’re only saving $20 over the course of a year. If you drive a lot and buy 800 gallons of gas a year – you’re still only saving $40.
If you would instead used a regular cash-back credit card, you would likely have saved far more. Let’s say the cash back card offered you 3% back on all your purchases. If you bought 400 gallons of gas at $2.00 per gallon, it would cost you $800 and you would get $24 back. Obviously, in this scenario the cash-back card is the better option. If you can get a credit card with a higher cash-back percentage then you’ll be even further ahead!
Watch Out for Introductory Rates
With gas credit cards, you have to read the fine print carefully. Some will say that you’ll get a much more generous discount on your gas than you’ll actually end up getting. For example, the advertisement might say that you’ll get 10 cents per gallon. The problem is that the rate of 10 cents per gallon might be for a limited time only. After that, a much lower permanent discount rate is substituted in. This could be half of the introductory rate or less. So, while you thought that you were getting a discount of 10 cents per gallon, you might end up only getting a discount of 3 cents per gallon.
How long do the introductory rates last? While it wouldn’t be so bad if they lasted a year or even six months, most last about a month or two. After that, you won’t be getting the great discount you were hoping for.
You Won’t Have Flexibility
Even if you were able to get a great discount from your gas credit card, taking advantage of it could make things more difficult than if you had a cash-back credit card. After all, with a gas credit card you’ll only save if you make sure that you buy all of your gas at the same chain of gas stations.
That means you could end up driving around looking for the right gas station – while you waste time and gas. With a cash-back card, you don’t have to drive around everywhere looking for a Chevron or a BP station – you can go to any station and get a discount.
You Won’t Earn Points Elsewhere
Getting a gas credit card might give you a reward for your gas purchases, but what about your other purchases? Most gas cards don’t offer rewards on those. That means that you will either have to use your gas credit card for other purchases and not get rewards or you will have to have another rewards card to earn points on those purchases.
While there is nothing wrong with having more than one rewards credit card, it might be simpler to pay your bills if you limit the amount of credit card statements you have to open, review, and pay.
The Bottom Line
Ultimately, while there are some benefits to gas credit cards, they’re often not as good as they seem once you read the fine print. Also, they’re not as versatile which makes it inconvenient to refill your gas tank.
Rather than getting a card that only gives you rewards at one place, it might make more sense for you to get a cash-back card. A good cash-back card will often allow you to get more money back and it will also make it easier to earn points and manage your finances.
Author: Jeff Gitlen
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