Gasoline fill-ups may psychologically induce “pain at the pump,” possibly because gas stations publish pricing at public junctions, making price increases like those that have frightened consumers in 2022 easy to notice.
However, when choosing a credit card that offers larger rewards on service station purchases, keep in mind that your gasoline spending may not be as high as you believe. Here’s a fast calculation:
- According to federal data from the U.S. Energy Information Administration and the Bureau of Labor Statistics, the average U.S. household spends around $2,000 on gas in a typical year.
- With the exception of 2020, when the COVID-19 epidemic severely reduced driving, annual spending has remained around that level since 2017.
A 3 percent petrol rewards credit card earns $60 per year on that amount, which is equal to $5 per month for the entire household.
The argument is that getting extra cash back or points for gas station purchases is fantastic because you are rewarded for spending money you would have spent anyhow — and big petrol spenders will get more rewards than usual. However, other components of a rewards card are likely to be more valuable.
“The greatest gas cards are likely to be those that not only give you extra points on gas station purchases, but also reward you handsomely for other types of expenditure.”
As a result, the best gas cards are likely to be those that not only give you extra points on gas station purchases, but also reward you generously for other types of expenditure. Cards branded with a gas station name typically offer subpar value — “5 cents off each gallon,” for example, is worth significantly less than 5 percent cash back — while binding you to a single brand.
Currently, a good goal is to obtain at least 3% back on gas station purchases.
What to think about
Annual fee: Annual fees reduce the overall worth of your awards. There’s no incentive to pay an annual fee for a gas card unless it comes with a bonus. For example, American Express’s Blue Cash Preferred® Card has an annual charge of $0 for the first year, then $95. However, it not only offers 3% back at US petrol stations and on public transportation, but it also offers a stunning 6% back on purchases at US supermarkets (up to $6,000 per year in sales, then 1%) and 6% back on certain US streaming subscriptions. All other purchases earn 1% back. Terms and conditions apply (see rates and fees). That alone may certainly justify the annual cost.
Caps on rewards: Take note of if your gas incentives are time-limited. Some caps are quarterly, while others are annual. The average household spends $500 on gas each quarter. Determine your expenditure and whether it is under the rewards cap of the card.
Redemption value: Just because a credit card offers triple points for gas does not imply that the rewards value is 3 percent. Many points are worth a dime each, but others are worth less. What can you do with your gas points once you’ve accumulated them?
Gas station or pump: Higher points for gas station purchases apply to anything purchased at the service station, including items from related convenience stores and vehicle washes, with most cards. Some cards, however, indicate that their petrol rewards are exclusively valid for pay-at-the-pump purchases.
Membership criteria: Some credit cards have membership requirements that can cost you money or time to join. For example, you may be required to join a credit union in order to obtain a specific card, or you may be required to pay a membership fee to a warehouse club in order to obtain its card.