8 tips for using gas credit cards wisely

Although gas prices have dropped from their all-time highs, the current national average of well over $3.00 per gallon still has consumers feeling the pinch at the pump. One way to save money on gas is with gas rewards credit cards — which can help you earn rewards on your gas purchases.

Gas credit cards are available as private label cards for specific gas brands or as co-branded cards that are issued by banks and carry the logo of a payment network (such as MasterCard or Visa). There are also gas charge cards that aren’t part of a larger payment network and can only be used for purchases from the gasoline retailer. In addition, there are credit cards that offer bonus rewards for gasoline purchases, even though they aren’t co-branded with a gas retailer.

But just having a gasoline card doesn’t mean that you’re saving as much money as possible on gas. Here are some tips for using your gas credit cards wisely:

1. Don’t carry a balance

“As long as you’re paying off your balance in full every month, a good rewards gas card is found money.”

— Joe RidoutSpokesman for consumer advocacy group, Consumer Action in San F

However, Ridout cautions, gas rewards cards are not appropriate for consumers who carry a balance because these cards tend to have higher annual percentage rates than regular credit cards.

Paying interest can offset any benefits you receive from using a gas card. A typical gas credit card can have interest rates between 20 percent and 30 percent APR. When you carry a balance, the interest charges that you pay can easily exceed the value of the cash back or other rewards that you earn. Therefore, you should only use a gas card when you can avoid interest by paying your statement balance in full every month.

Here are Bankrate’s picks for best credit cards for gas rewards. Before you choose one, be sure to compare the APRs, especially if you plan to carry a balance.

2. Stack your savings with gas station rewards programs

One of the best ways to save at the pump is to stack your gas card rewards with points you earn through a gas station rewards program. Many gas stations offer loyalty programs that allow you to earn points on fuel and in-store purchases. Those points can then be redeemed for discounts when you fill up your gas tank. Some programs even allow you to connect a credit card to your loyalty account (like a great cash back card), helping you earn loyalty points for qualified spending at restaurants, online shopping and more

To take advantage of these savings, simply scan your loyalty card whenever you make a purchase. You can earn points for your purchase or use the points you already have to get a discount. Then, pay for your purchase with your preferred gas card — earning additional rewards or cash back with your card on top of the loyalty points you’ve earned for your purchase.

3. Don’t pass up cheap gas to use your gas card

Before signing up for a gas rewards card, look at your gas-buying habits. Where and how often do you fill up your gas tank? Do you burn gas on road trips when you travel? Do you need a gas rewards card or could you simply switch to a gas station with lower prices?

In addition, consider the differences between private label cards — also called retail cards — and co-branded cards. When you have a card that gives you additional points, miles or cash back for gas purchases, then you can shop around for the best gas price and still earn rewards. Just keep in mind that gas bought at warehouse fuel centers like Costco and Sam’s Club won’t be eligible for most cards’ bonuses.

4. Don’t drive out of your way to earn rewards

The savings offered by gas credit cards is small but significant. However, even if you have to drive a few extra miles to fill up, the gas you waste can largely offset your savings. You also have to consider the value of your time as well as other costs associated with maintaining your car. To best use a gas card associated with a specific retailer, make sure that you aren’t driving to stations that are out of your way.

For example, let’s assume you get 20 miles per gallon while driving in town. Let’s also assume you drive 1.5 miles out of the way (3 miles round trip) to purchase gas at a specific station. With gas at $3.25 per gallon, you’ve spent about $0.49 in gas to make the trip. If your card earns 1 percent cash back on $50 of gas, you only earn $0.50 — which is essentially what you’ve paid to make the trip. Even at 2% cash back, you’ve spent about half of your earnings just getting to the gas station.

5. Consider how and when you’ll collect rewards

Some rewards programs cap your rebate amount or set a minimum threshold for cashing out, so consider those details before signing up. Other gas cards or gas rewards programs may offer rewards in the form of a discount on a single fill-up. This can deliver much more value to a car with a large gas tank than a smaller one.

Other cards offer rewards points that don’t have a clearly specified value. Be sure to understand how valuable the points are before committing to a specific card.

6. Check the rewards cards you already have

If you’re not a heavy gas user, then you might be better off with a general rewards credit card that allows you to earn points for purchases in other categories, as well. In fact, some of these rewards programs are pumping up incentives by offering accelerated rewards in rotating quarterly categories — which often includes gas. Here are some of our picks for the best cards with rotating bonus categories.

7. Understand the card’s terms

Private-label gas cards can have less competitive rates and terms, on par with subprime cards offered to those with credit problems. That means consumers should watch out for high APRs, late payment fees, over-limit fees and enticing welcome offers designed to lure consumers in need of credit.

You’d wipe out the rebate savings from a gas rewards card by paying a high APR or fees. If you think you might carry a balance or incur late fees, you should be looking for a general-purpose card that offers the best possible terms.

8. Don’t overestimate gas savings

It can be easy to get excited about earning cash back on gas, especially if you’re earning 3 percent or more. However, you really need to consider how much savings that really is.

Although newer cars are more fuel efficient, according to the U.S. Department of Energy, the average fuel economy for a passenger car is about 24 miles per gallon. Additionally, the U.S. Department of Transportation Federal Highway Administration’s most recent numbers report that the average driver travels about 13,476 miles per year.

Someone driving 13,000 miles in a car that gets 24 miles to the gallon will consume about 542 gallons per year. Based on the current average price of a gallon of gasoline, which is $3.26, this will cost about $1,767 per year. Even if you are using a card that offers 3 percent cash back on gas, this will only result in about $53 in annual savings. That might not be enough to cause you to switch credit cards.

The bottom line: Are gas credit cards worth it?

Credit cards can be a great way to save money on gas, but only when used wisely. By taking care to choose the right gas card and being realistic about your potential savings, you can minimize the cost of fueling your car.

And if you’re trying to minimize the costs of fueling your business fleet instead of a personal car? These types of cards can often help even more. Business gas cards, also called fleet fuel cards, can help you track and save on business-wide fueling expenses for both you and your employees. Just keep some of these tips in mind when deciding on and using your new fleet fuel card.