Credit Card Articles

The Great Gas Rebate Cutback

1 September 2011 by CreditCardsCo™

Credit cards with CashBack benefits have been very popular among American financial customers for many years. Obviously, this is because it is widely preferred to earn rebates on things that you buy every day. Alas, this may be a trend that will soon end.

With gas prices steadily rising for the past several years, many consumers have been discouraged. That is to say, many consumers who did not have credit cards with refueling benefits have been discouraged.

In fact, consumers in the United States who hold credit cards with gas rebates have actually felt a little relief knowing that higher gas prices actually earn them cash back rewards at a much faster pace than before. This has been encouraging for consumers because gas is something that people buy once, twice, or even three times a week. Multiple car households, then, probably benefited the most.

The Rebate CutBack

The unfortunate truth is that credit card companies are hip to this trend and thus changing their regulations in order to retain profits. While they are still going to offer gas benefits in cash rebate form, they are substantially reducing the percentage by which you earn your rewards.

  • Citibank is cutting their Citi Dividend MasterCard rebate from 5% to 2% (a 60% decrease)
  • American Express is stopping their "double" cash back options on "everyday" transactions through its Membership Rewards program

Obviously, this is just two simple examples of what is bound to become a new trend across the credit card industry. This means that if you currently hold a gas rebate credit card you can probably expect a change to come your way (if it hasn't already). At the same time, gasoline sellers who sponsor credit card products have not reported any expected changes to their programs, so that's a good sign of healthy competition in the near future.

Redefining Benefits

Of course, altering these rebates (or ridding of them altogether) will be quite discouraging to consumers so credit card companies are trying to get creative with how they offer other benefits in order to retain your business. For example:

  • You can still earn a 1% cash back bonus on most Citi Dividend MasterCard purchases (up to $300 per year) and a 2% cash back bonus on new, extended categories.
  • You can earn an increased 5% to 7% on purchases made with over 300 Citi Dividend Merchant Network affiliate partners (including national retailers like Linens 'n' Things and Sears) with no annual limit.
  • American Express will still offer single points on all purchases made at grocery stores, gas stations, and drug stores.
  • Delta Sky Miles and Blue Cash card holders will still earn double points on gas (with some limitations).

Obviously this is not exactly what consumers have come to appreciate (and it seems a little more confusing) but at least credit card companies are trying to find ways to keep their customers happy. You don't have to be discouraged if you notice changes in your account.

What You Can Do

Of course, if you haven't seen any changes to your card's programs you should keep your eyes open for it soon. At the same time, educate yourself on the new credit CARD act and the FAIR Credit Act, which have increased consumer protection within the credit card industry.

Credit card companies cannot just make changes to your account without giving you a fair amount of time beforehand. This is so that you can weigh the benefits with the changes and decide if you want to continue doing business. There will always be credit cards on the market that are designed to be extremely competitive.

Yes, it can be a lot of work to find a new credit card that offers the benefits you want without the prices or regulations that you are trying to avoid. However, in the end you have to ask yourself if holding onto your card is worth it or if a couple of hours of investigation will have a bigger payoff for you in the end.

Final Word

Everyone suffers during tough economic times and unfortunately this trickles down to consumers. One trend you can expect to see across the financial industry is a reduction in gas rebates, especially if gas prices continue to rise over the next few years.

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