Using the new Citi Costco card can make sense at the pump, but there are other ways to save on gas
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Dear Cashing In,
The Citi Costco Anywhere Visa made its debut in June 2016, and it is a popular way for Costco members to earn money back at Costco. The card has no annual fee, but you have to be a Costco member to apply for one. (Annual memberships start at $55.)
With its big bonus at gas stations, though, the card is also a good way to earn money back when buying gas. The card gives you 4 percent back on gas from Costco and other gas stations, up to $7,000 annually. It also gives you 3 percent back on travel and dining out, 2 percent on nongas purchases at Costco or Costco.com and 1 percent on all other spending. The cash back is in the form of a reward coupon mailed to credit card holders each February, redeemable at Costco for merchandise or cash.
On gas at Costco, there is no additional rebate or discount besides using the Citi card. It’s worth noting that the extra 2 percent back that Costco Executive members receive does not apply to gas purchases.
However, like much of Costco’s merchandise, Costco’s gas tends to be cheaper than what you can find at other gas stations. The gas-price tracking website GasBuddy.com in 2016 awarded Costco its “Low Price Award” for the fourth straight year. It said the average Costco sold gas nearly 20 cents a gallon cheaper than competitors.
Costco says its “approach to gasoline is the same as inside the warehouse – high volume and low prices.”
If you have the Citi Costco card, the best advice is to fuel up at Costco and use the card, so you get the dual advantage of the low price and the additional 4 percent off. If you don’t have a Costco membership or you aren’t a Costco Cash Card member, you are out of luck with Costco gas
But there are other strategies you can use to save money at the pump.
For example, there are several other reward credit cards that offer bonuses on gas purchases. If you have one, be sure to use it at gas stations.
Even if you don’t have a reward card with gasoline perks, other reward cards can come in handy through the purchase of gas gift cards. If you have a reward card that offers bonus points or extra cash back at grocery stores, look at your grocery store’s gift card rack. It could very well sell gift cards for Shell or BP or other big gas retailers.
If you buy one of those cards at a supermarket while using a reward card that offers extra points or cash back at grocery stores, you will receive those bonuses. Then, when you use that gift card to refuel, it is as though you are receiving a bonus on gas purchases (or a discount).
Of course, compared with other spending, gas is not usually a major expense. The Bureau of Labor Statistics says that the average household spends about $2,100 annually on gas.
So even if you were able to receive 4 percent back on all your gas spending, you’re talking about an average of only $84 a year in savings.. It might not be worth applying for new cards to earn such meager rewards, but then again, every little bit adds up.