Cards with quarterly categories
The issue: Quarterly bonus-category cards are only valid for petrol purchases during the three months when gas stations are a 5% rewards category. If you use such a card for gas all year, it returns a meager 1% in the other three quarters, totaling a 2% cash-back card for gas. When used for three months, it’s fantastic; when used all year, it’s a letdown.
The Discover it® Cash Back and the Chase Freedom FlexSM are two good quarterly category cards that usually involve gas.
Quarterly cards are also useful for anticipated spending.
If home improvement retailers become a category shortly, you might postpone a home renovation job for a few weeks until the 5% category becomes active. But you can’t usually do that with gas. You buy petrol when you need it and rarely stockpile it.
The answer
Quarterly category cards are suitable for a two-card gas approach. When gas provides bonus rewards, use the quarterly category card, and use a separate card the remainder of the year.
“When gas provides bonus benefits, use a quarterly category card, then use a different card the rest of the year.”
For example, you might use the Chase Freedom FlexSM as your category card to get 5% cash back for three months. You might use a different card that offers larger rewards on gas purchases the rest of the year.
Warehouse membership cards
Warehouse clubs deserve special consideration because they provide substantial incentives for gas purchases.
Upside
If you’re already a member of one of the two major warehouse clubs, Sam’s Club or Costco, you have several excellent credit card options with excellent gas rewards rates. The Sam’s Club® Mastercard® offers 5% cash back (up to $6,000 a year, then 1%) at EV charging stations and eligible gas stations worldwide, including Sam’s Club locations. The Citi Costco Anywhere Visa® Card offers a generous 4% cash back on qualified petrol expenditures (up to $7,000 per year).
Downside
Aside from the spending limits, the warehouse cards have a few other disadvantages. You must be a member, which comes with an annual membership charge. Furthermore, both cards have complicated redemption conditions. For example, you can only redeem prizes in physical stores once each year.
The issue with “cents off per gallon”
Instead of benefits based on dollars spent, some credit cards and many gas-station-branded cards provide a number of cents off each gallon. This may appear appealing at first. It sounds fantastic to save 6 cents per gallon — until you realize it’s only 60 cents off a 10-gallon fill-up.
When gas costs are low, cents-off rewards are more appealing. When petrol prices are $2 per gallon, for example, 6 cents off is a solid 3 percent discount, comparable to the rate of many good credit cards that provide gas as a rewards bonus category.
“It seems nice to get 6 cents off per gallon — until you realize it’s only 60 cents off for a 10-gallon fill-up.”
However, prices are frequently significantly higher. This is particularly true for vehicles that demand premium fuels. When gas costs $3 per gallon, 6 cents off is only a 2% save. The incentives rate is a dismal 1.5 percent at $4 per gallon.
To their credit, a few large fuel firms have increased credit card benefits to 10 cents off each gallon. If gas costs $3, the rewards rate is 3.3 percent.
Perhaps more troublesome is that these cards typically bind you to a particular brand of service station, which may not be accessible where you need it.
