An interesting new mindset is emerging and one that doesn’t bode well for oil companies looking for consumers to carry their gas cards. We take a look at the pros and cons of carrying gas rewards credit cards.
They cost me too much money and I can’t use it like I do my Visa
Where are my rewards?
Nah, I’d rather earn rewards with my Chase credit card, so I don’t even use my gas card. I’m not even sure it’s not expired.
Those are some of the replies we got from our impromptu survey. The question was, “If you have a gas credit card, do you use it?” Overwhelmingly, the three responses above are ones we received out of the three dozen people we asked. Again, there’s nothing scientific about our survey, we were simply wondering what folks thought on a Saturday morning as they went about their business of picking up dry cleaning and filling up their cars for the upcoming work week.
Defining a Gas Card
If you’ve ever carried – or currently carry – a charge card from your favorite department store, you know well the limitations. It’s the same with gas cards. You can only use those cards at the merchant whose name is across the top of it. You can’t buy Exxon gas with a Chevron fuel card. Not only that, but your interest rate probably hovers in the double digits. And rewards? Good luck. They rarely, if ever, offer consumer any kind of rewards.
That’s probably why most reach for their general purpose credit cards instead. Often, they see cash rewards which means ultimately, they’re being rewarded for filling their tanks when they use their MasterCard instead of the credit card that was designed exclusively for the consumer’s gas preference. Some credit cards even offer bonus discounts at gas stations. Both Discover and Chase credit cards have rotating categories that allow bonus earnings each quarter – and one of those quarters include gas purchases.
That said, it’s important to keep in mind the gas stations don’t have much room when it comes to profits. Any slight discounts they offer their consumers can sometimes mean no profits at all for the gas station owners. These specially branded gas cards often pair with the big players in the credit industry. We’re beginning to see new interest in co branded offers with the biggest names in the gas industry and the biggest names in the credit industry; still, it might be awhile before the really great offers begin landing in your mailboxes.
With these offers, though, you’re more likely to pay an annual fee that might cancel out any gas savings. It’s one reason why we don’t see many co branded cards designed for fuel rewards. Unless you fill up often, this still might not be the right choice for some. That said, if you’re a family with teens and have multiple cars that fill up weekly, then you could enjoy significant savings – which is always good when gas prices are at historical highs.
For instance, one co branded offer allows a ten cent discount per gallon, but the catch is you must spend $300 a month on fuel. If you’re single and use your car only on the weekends, this credit card is going to cost you. If you’re a mom who has a husband who travels, two teens with their own cars and you’re the favorite mom who does the whole taxi service for the teens who aren’t yet driving – then yes, these are the types of consumers who benefit from those co branded cards.
Interestingly, and as we’re all watching to see who brings the Smart Chip to the forefront in the credit industry, ExxonMobil has already beat the big players to the punch. It already incorporates the chip embedded technology. It’s a card that can only be used to buy gas, though. You’ll earn a six cent per gallon credit for the first one hundred gallons of each billing cycle. To qualify, though, you have to buy at least 45 gallons before the count even begins on the one hundred gallons. In other words, you have to buy 145 gallons and you earn rewards for 100 gallons. Here’s where it gets good, though.
With this fuel-only card, you earn rewards and those rewards can be used for things like airlines rental cars and hotels. A $29 annual fee comes with it and there’s a rather detailed process you must go through to book your travel hotels, flights and rental cars. And each time you do, you might be hit with a $20 booking fee. With these kinds of confusing restrictions, it’s little wonder consumers are sticking to their tried and true rewards cards from their favorite banks.
So do you carry a fuel card and if you do, is it a card that’s used often or do you prefer to earn the cash back and other rewards from your traditional credit card?