For many consumers, the gas station is a dreaded pit stop. As gas prices continue to climb, drivers—specifically their finances—are guaranteed take a hit when their tank nears "E."
With gas prices hovering around $3.78 on average throughout the country, according to AAA, drivers are looking for methods to cut costs wherever they can. One of the easiest ways to do that is with a credit card that offers rewards for buying gasoline, such as cash back.
Although they don't directly reduce the price per gallon you pay at the pump, rewards credit cards are a great way to counter today's stubbornly high gas prices. "Most of us feel the pain every single week. We know it used to cost me $35 to fill up, and now it costs me $40," says Beverly Harzog, an independent credit card expert and consumer advocate. Big-time commuters in particular suffer when fuel costs rise. About 8 percent of Americans have commutes of an hour or longer, according to the U.S. Census Bureau's annual American Community Survey for 2011.
News outlets frequently remind consumers of the high price of driving, says Harzog. But the weekly pinch and constant reminders shouldn't rush you to get a gas rewards card without first surveying your options.
Drivers generally have a choice between a station-specific credit card and a general card from major lenders (e.g., Visa and American Express). Many of the big gas companies, including Shell, BP, and Exxon, offer their own credit cards, but experts say drivers are typically better off with a general rewards card.
Signing up for a station-specific card significantly limits the number of places where you can bank rewards, which is why LowCards.com's credit expert Bill Hardekopf recommends a generic rewards card. Hardekopf favors these cards because they enable consumers to not only earn rewards on gas but also on purchases at, say, supermarkets or department stores. General rewards cards also provide more flexibility. "You should always get the cheapest price for gas," Hardekopf says. "If you have a gas company card, that station may be a nickel higher one day than the other place across the street, so why not just get a card that's good at every station?"
Gerri Detweiler, director of consumer education at Credit.com, points out gasoline prices also have the potential to drop. Consequently, she says, "I would want a broader card so that, no matter what, I know I have a good rewards card."
Still, for some people, a station-specific rewards card is the best choice. For instance, if you travel the same route to work every day, a credit card from a station you pass may be a good fit for you, Hardekopf says. Some cards are co-branded, like the joint Visa-BP card, which may provide the best rewards opportunities.
Nonetheless, for most drivers, getting a credit card that offers rewards on a variety of purchases—not just gas—is the way to go. So which rewards card is right for you? Here are three of the experts' favorites:
PenFed Platinum Rewards Visa Card. Detweiler considers this the best gas rewards credit card, adding it's also a great all-around card. You earn five points per dollar spent on gas purchases, three points per dollar on groceries, and one point on everything else. Points are trickier to track than cash back, but Detweiler says the rewards are rich. "If you earn 25,000 points on gas purchases, that translates into $250," she says. "Of course, that's an awful lot of gas, but some people who are commuting every day may spend that." The card has no fee for foreign transactions, no annual fee, and a low starting annual percentage rate (APR) of 10 percent.
Chase Freedom Credit Card. Harzog says this card is one of her standbys. You get 5 percent cash back on gas, although only for half the year, as the card is on a rewards plan that rotates every quarter. Per this year's schedule, cardholders earn 5 percent on gas from January to March and July to September. However, be aware those gas rewards are capped at $1,500 per cycle; after that, you earn 1 percent cash back. Its other rotating categories include restaurants, drugstores, and movie theaters, but customers must enroll each quarter to receive those rewards.
Additional perks include a signup bonus of $100 cash back if you spend $500 within the first three months, and a zero percent introductory interest rate on purchases and balance transfers for the first 15 months.
Amex Blue Cash Everyday Card. Cash back on gas rewards for this card isn't in the same ballpark as the cards offering 4 to 5 percent back, but Hardekopf says the Amex Blue Cash Everyday Card has its advantages. You get 2 percent cash back on standalone stations—meaning most national brands, such as Shell, Sunoco, and Gulf; stations belonging to discount stores, superstores, or warehouses (e.g., Cosco) are excluded. Those exclusions are a drawback, but you earn a sizable 3 percent cash back on supermarket purchases (capped at $6,000 annually, 1 percent after), 2 percent on select department stores, and 1 percent on all other purchases. The card has a zero percent introductory APR for the first 12 months.
In addition, Hardekopf recommends paying a little extra to upgrade to the Blue Cash Preferred Card. For a $75 annual fee, you get 6 percent back on supermarket purchases and 3 percent back at standalone gas stations and select department stores.
Non-Credit Card Rewards Programs. To draw more customers, many gas stations offer free loyalty programs that allow you to earn extra savings. The Fuel Rewards Network, for example, awards consumers points for purchases at restaurants and department stores, which can be redeemed at participating Shell locations.
The bottom line: Settling for a second-rate rewards card means you're leaving money on the table, says Odysseas Papadimitriou, CEO of the credit card comparison website CardHub.com. With the right card, you can drive down how much you pay at the pump and keep your car going without running out of cash.