See How Much Money We Can Save You!
Gasoline Credit Cards: What You Need to Know
Soaring gas prices predicted to remain in the high range throughout the year have forced consumers to find their own remedies to ease the pain at the pump. Credit cards that offer cash back are becoming increasingly popular with consumers who are searching for savvy ways to save a couple of bucks at the pump.
Last year alone, credit card companies mailed out about 14 million gasoline credit card offers, an increase of about 100% when compared to the year before. This vast interest in cash back programs has credit card companies in a competition frenzy with some competitors offering as high as 10% cash back on gas purchases during the introductory period.
How Gasoline Cards Work
Basically, there are two types of gasoline credit cards with cash back programs. Firstly, there are credit cards offered by major oil companies like Exxon-Mobil, Chevron, Hess and Shell who offer cash back bonuses each time you pump gas in one of their stations. The catch is, even though you can use this card in any gas station of your choice, you will only receive cash back bonuses on gas purchased from their own stations.
The second type of gasoline credit cards are usually issued by major financial institutions and credit card companies. All major credit card companies such as Visa, MasterCard, American Express and Discover offer cash back credit cards with varying percentages of cash back bonuses. These cards offer customers the flexibility of choosing any gas station of their preference while still receiving the cash back bonuses. In addition to gasoline rebates, these cards usually offer limited cash back on everyday purchases as well.
For instance, both Discover and Citi Bank recently introduced their own versions of gasoline credit cards with 5 % cash back on all gasoline purchases and 1% cash back on all other purchases. So, let’s assume on average you spend $40 a week on gas and another $50 on other everyday expenses. At the end of the month, you will get $10 cash back on all your purchases.
So, What’s the Catch?
We have looked at the positive aspects of gasoline credit cards and so far it has been an attractive choice. Now, let’s look at some of the negative features associated with gasoline credit cards.
First of all, to qualify for cash back bonus programs you need to have good credit. Since a majority of American’s falls under poor to average credit ratings, most of them will not get qualified. Even if they do qualify, they will only be eligible under a high interest rate, which will eventually consume any cash back savings.
Secondly, you must pay off your monthly balance in full in order to reap the savings. This obviously makes sense, as it would be irrational to pay 18% in interest charges while saving 5% on gasoline purchases. So if you are one of the millions of American’s who are unable to pay off the balance in full each month, this type of card is not for you.
Thirdly, you must be aware of the cash back limits before you sign up for a gasoline credit card. All credit cards carry some sort of a cap on how much cash back you can earn during the year. Most credit cards allow clients cash back bonuses for up to $300-$600 per year.
Finally, keep an eye on your cash back bonuses if you have not yet redeemed the savings. Some cash back credit cards allow clients a period of 6-12 months to redeem their bonuses. After this period, the savings will expire and the customers will not be able to claim it.