How credit cards take a bite out of gas prices
Bonus points, cash back or cents off per gallon add up
By Lyn Mettler | Published: September 23, 2017
Rewards credit cards and gas cards can help you take a little bite out of gas prices, which spiked in the wake of Hurricane Harvey.
According to AAA, prices at the pump rose by more than 30 cents a gallon for unleaded after Harvey reduced the nation’s gasoline refining capacity, and are only now starting to drift back downward as refineries come back online. With prices remaining elevated, saving 3 percent on gas purchases or 5 cents or more per gallon adds up.
How much? Over a year, the average U.S. consumer spends just more than $700 on gas (about $1,400 for a couple who both drive), according to Bank of America’s 2016 Year-End Consumer Spending Snapshot. If your credit card earns 3 percent cash back on gas, that $700 would add up to a savings of $21. That may not seem like much, but everything helps.
The gas price bump caused by the hurricanes is easing, spokeswomen for AAA and GasBuddy.com say. GasBuddy petroleum analyst Allison Mac projects gas prices will continue to drop until February 2018, as is usual for this period of the year.
Here are some of the strategies that credit cards rewards gurus, couples and businesspeople use to rack up cash back and points at the pump:
Choose your reward strategy, and do the math
Before you select a credit card for your road trips and daily commute, decide what kind of rewards you want to earn when you fill up. That will help you determine what kind of credit card to use to charge gas and other purchases.
Perhaps it’s miles to book flights, points for hotel stays or flexible points that can be used for gift cards, travel or even on shopping at online retailers. Many people simply want cash back in their pocket.
For example, married teachers Grant and Bonnie Sinclair, who travel over every school break and blog at WanderFilledLife.com, prefer earning travel rewards. This summer they drove across 12 states, putting about 10,000 miles on their car and spending more than $2,300 on gas.
By strategically using credit cards to earn rewards on their spending, they were able to amass 11,000 points to cover hotels for an upcoming winter trip to several National Parks.
“We prefer getting rewards points we can use for travel rather than getting straight cash back. This is a personal preference and we find it works better for us,” said Grant Sinclair, who lives with his wife in Woodstock, Georgia.
Once you’ve set a rewards strategy and before you pick a credit card (rewards card or gas credit card), do the math.
At a dime off per gallon, those who spend $150 on fuel per month save about $6, or 4 percent, according to our most recent gas card survey.
While 10 cents off a gallon is good compared to a typical rewards card’s payback of 1-3 percent, gas-brand cards’ high APRs, restrictions on payouts and complicated rules make them a wise choice for only a few.
Also worth noting: Per-gallon discounts are worth more when gas prices are low. A flat percent cash back with rewards cards is worth more when you are paying more at the pump.
Hotel, travel and flexible rewards credit cards
For those who put travel at the top of their wish list, like the Sinclairs, many travel credit cards have high rewards for payments at the pump.
When enrolling in the free Fuel Perks program through IHG Rewards, members can pump gas at a 5- to 7-cent discount per gallon at participating Shell stations.
“It’s very easy,” said Liz Crisafi, head of loyalty, partnerships and portfolio marketing in the Americas for InterContinental Hotels Group. “All you have to do is link your IHG Rewards Club account and scan your Fuel Rewards card at the gas pump, and you start saving instantly.”
The Hilton Honors Surpass Card from American Express* also gives high rewards for gas spending with 6 points per dollar earned at gas stations.
You can also opt for a more flexible travel credit card that allows you to transfer points to different airlines and hotel brands as needed.
For example, the American Express Premier Rewards Gold Card* earns 2 points per dollar on gas and has no annual fee the first year followed by a $195 annual fee thereafter. Points can not only be transferred to airlines and hotels, but used to purchase Airbnb rentals or even gift cards for gas.
For a lower annual fee, consider the Citi ThankYou Premier card,* which nets 3 points per dollar on both travel and gas expenses for a $95 annual fee after no fee the first year.
Gas station and wholesale club credit cards
Jeff White, financial analyst for FitSmallBusiness.com, says that gas station credit cards can earn you some solid rewards on fuel.
He recommends getting a card for a gas station with many locations in your region, such as Marathon for Midwesterners or for those who travel in that area of the U.S.
The Marathon Visa credit card offers up to 25 cents cash back per gallon when you spend at least $1,000 per month on the card. White, who is based in Alabama, uses his Marathon card when he visits his wife's family, who live in the Midwest, one or two times a year.
“Currently I have two cards that I use for gas. The first one is my BP card,” White says. “BP has a ton of gas stations right around where I live and work. I get $0.25 off per gallon for every $100 I spend. It’s not the best of all gas station rewards, but sometimes you have to take what you can get with the stations you’re most likely to use.
“I also use my Chase Freedom card because one quarter per year I get 5 percent cash back on gas spending,” he says.
“Ultimately, it’s important to shop around and see what’s the best reward for the pumps you’re likely to be using.”
If you shop at a warehouse club like Costco or Sam’s Club, you may find more value in using the store’s branded credit card to save on both purchases and gas.
Sharon Marchisello of Peachtree City, Georgia, author of the e-book “Live Cheaply, Be Happy, Grow Wealthy,” uses her Sam’s Club Mastercard* for gas, because she earns a 5 percent rebate at any gas station. After topping out at $6,000 per year at that 5 percent rate on gas purchases, she will earn 1 percent when filling up.
Marchisello notes, too, that Sam’s Club also typically offers the cheapest gas prices in the area, saving her even more.
The Costco Anywhere Visa Card by Citi* is an option for members of the warehouse club, as it provides 4 percent cash back on up to $7,000 in fuel purchases per year (then 1 percent thereafter).
Cash back card options
When visiting a gas station for which you do not have a gas station credit card, White recommends a general cash back credit card. His top pick is the PenFed Platinum Rewards Visa Signature card,* offering 5 points for every dollar spent on gas.
“The PenFed card requires you to have a current account open with the credit union,” White notes. “I’ve been considering joining a credit union this year for a second checking account, and, should I decide to take the leap, then this will be the direction I take so that I can get access to these rewards.”
Other options with high payback on gas expenses include the Blue Cash Preferred Card from American Express,* which nets 3 percent back on fuel with no annual fee the first year, as well as Chase Freedom* and Discover it Cash Rewards* cards, each offering 5 percent money back up to $1,500 when gas purchases are the rotating quarterly category.
Added bonus with the Discover it card: First-year cash back is matched.
Monya De, who blogs at WorthItWorld.com, says she uses her Chase Freedom card to buy up to $1,500 in gas gift cards at gas stations when fuel is the bonus category (the 5 percent bonus tops out at $1,500 in purchases during the quarter) and then uses the gift cards for her gas costs for the next year.
Another limited-time option? Amazon Rewards Visa* and Amazon Prime Rewards Visa Signature* cardholders can earn 4 percent cash back on gas purchases in September, October and November 2017. The regular cash back savings on gas is 2 percent with the cards.
And a new entrant that’s not a credit card is the “Pay with GasBuddy” card.* It’s linked to a checking account through the Gas Buddy app, and offers 15 cents off per gallon with the first fill-up and 5 cents off thereafter. There is no fee, at this time, to use the payment service.
Bonus tip: Stack your card rewards
With gas rewards programs from grocery stores, such as Kroger and Safeway, you can stack your credit card rewards. Sign up for the programs and earn points when you shop that can be redeemed for cents off each gallon when you fill your tank.
For example, with Safeway’s Randall’s stores in Texas, gas rewards members can earn up to 20 cents a gallon off at Chevron and Texaco stations or up to $1 a gallon off at Randall’s stations.
How to stack your rewards: If you have a Chevron or Texaco credit card, you earn 3 cents a gallon in fuel credits (and often a sign-up bonus of additional cents off for a period of time), on top of your Randall’s gas rewards.
No matter which credit card you use when you get gas, you can almost always earn cash back to cut the cost or points to apply to future travel or rewards. Oh, and with the GasBuddy app, you can find the lowest gas price in your area and then earn your rewards on top of that.
Pay less, earn more every time you fill up. That’s a winning combination.
* The content on this page is accurate as of the posting date. Please see the bank’s website for the most current version of the offer.
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