Do you drive a lot, fly frequently, or do both? If you answered yes to any of that, gas credit cards and airline miles credit cards may save you money—and get you other useful perks.
Gas credit cards and airline miles credit cards are types of rewards cards—as you make purchases, you earn rewards. But they generally offer very different benefits, making a head-to-head comparison not very useful. With gas credit cards, the rewards are generally gas discounts or cash back; with airline credit cards, the most common rewards are air miles that can be redeemed for flights.
But once you start examining the options, the picture gets more complicated. Within both broad categories, there is a variety of options with different levels of rewards and fees. So it makes sense to think carefully about your travel patterns to see whether each type of card meets your needs. You may benefit from having both types.
Gas credit cards help to cut the amount you spend on gas each month by providing discounts or cash back on gas purchases. There are several types of gas credit card:
- Traditional gas station cards
- Gas station credit cards
- General rewards credit cards
Traditional gas station cards are a bit like store cards: you can only use them to make purchases at a specific brand of gas station. You generally get discounts from 3 cents to 10 cents per gallon.
Gas station credit cards are co-branded by a gas station brand and a credit card company. They offer more flexibility than traditional gas station cards because you can use them to make purchases anywhere. Those purchases earn you discounts on gas from the gas station brand.
General rewards credit cards offer the greatest flexibility because they aren’t associated with any gas station brand (this is the approach American Express offers, along with other card providers). You generally earn cash back or points on all spending. Depending on the credit card, you may get higher rewards for spending in specific categories such as travel, supermarkets, or purchases at any brand of gas station. Some credit cards offer 2% or 3% cash back when you buy gas, for example. If gas costs $3 per gallon, that translates into 6 to 9 cents back for every gallon you buy.
There are several reasons why you may want to consider getting a gas credit card:
- You drive a lot and want to cut your gas spending. Gas credit cards offer bigger discounts on gas purchases than other types of credit card.
- You prefer a specific brand of gas.
- Branded gas station credit cards often have no annual fees.
- If your credit history is less than stellar, branded gas station credit cards may be easier to get than other types of rewards credit card.
- Some gas credit cards provide other benefits like car rental insurance.
Airline rewards credit cards are co-branded by an airline and a credit card company. You can use them to make purchases anywhere that the credit card network is accepted. When you spend with the card, you earn points, equivalent to air miles flown, in the airline’s rewards program. You can then redeem the air miles for flights, seat upgrades or other benefits. Most airline miles credit cards come with an annual fee, although it’s often waived for the first year.1
Earning air miles: Airline miles credit cards typically earn you at least two air miles for every dollar you spend directly with the airline on flights, vacation packages, and other items. You generally get one mile per dollar for other purchases. Some cards also offer introductory bonuses that can reach tens of thousands of miles if you spend several thousand dollars in the first few months of owning the card. In addition, you earn miles when you fly with the airline or partner airlines. The number of miles earned may vary depending on factors such as the distance flown, seat class, and ticket price.
Redeeming airline miles towards flights: The biggest attraction of airline miles credit cards is the ability to earn air miles that you can redeem for flights with the airline or its partners. In the past, airlines generally charged a fixed rate in air miles for these award flights—say, 10,000 or 15,000 miles for an economy-class domestic flight. But many airlines are switching to “dynamic” pricing—the number of miles you need for an award flight will vary depending on the cash price of the ticket, which is determined by factors such as seat availability. As a rough guide, experts estimate that the miles in many airline programs are now worth between 1 cent and 2 cents each.2 You can also use airline miles to buy upgrades and vacation packages from the airline.
Additional benefits of airline miles credit cards: Some airline miles cards come with a set of other built-in benefits, such as:
- Free checked bags (though there may be some limitations)
- No foreign transaction fees for purchases made abroad
- Priority boarding
- Discounts on in-flight purchases
- Car rental insurance
- Low-priced access to airport lounges offering snacks, drinks and Wi-Fi
Premium airline miles credit cards: Some airlines and credit card companies offer premium tiers of cards with higher levels of benefits for a higher annual fee. These benefits may include:
- A free or low-cost companion ticket for a domestic round-trip flight
- Additional bonus miles when you sign up or renew
- Access to airport lounges
You may want to consider getting an airline miles credit card if you:
- Fly a lot
- Tend to fly with the same airline or its partners
- Like the idea of flying for free
- Want perks such as airport lounge access and priority boarding
- Feel the benefits outweigh the annual fee
