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How Do Gas Credit Cards Work?

Gas credit cards offer many benefits, but how are they different from other credit cards? Find out if gas credit cards are the best choice for you.

By Mike Faden | American Express Credit Intel Freelance Contributor

4 Min Read | January 17, 2020 in Cards

 

At-A-Glance

Gas credit cards provide discounts, cash back or other rewards when you buy gas.

There are two main types of gas credit card: branded gas station cards and general rewards cards.

Branded gas credit cards provide discounts on a single fuel brand; general rewards cards provide benefits for a broader range of purchases.

The average American household spends nearly $2,000 a year on fuel.1 If you’d like to see a little less of your hard-earned cash disappearing each time you fill your tank, gas credit cards can offer some relief. They provide discounts or cash back on gas purchases, helping to top up your wallet each time you refill.

 

Gas credit cards generally fall into two main types:

  • Branded gas station credit cards are closely tied to a single chain of gas stations, and generally only provide discounts on that gas brand.
  • General-purpose rewards credit cards provide cash back or other rewards for gas purchases at any gas station, as part of a broader set of rewards. 

 

The choice of which is the best gas credit card for you depends on your fueling habits and other factors.

 

How Do Branded Gas Station Credit Cards Work?

A branded gas credit card is closely linked to a specific gas station chain; the brand name is usually prominently featured on the card. Drive into any of the major-brand gas stations and you’re likely to see offers for these gas station credit cards attached to fuel pumps, beside the cash register, or positioned in other locations likely to catch your eye. However, despite the brands’ efforts to attract your attention, experts say these cards are much less widely used than decades ago, when some gas stations wouldn’t accept regular credit cards.2

 

Still, if you fuel up at many different gas stations, you may start to feel that there are more gas-card options than oil wells in Texas. To sort through the confusion, it helps to divide these cards into two main sub-categories: traditional gas station cards and gas station credit cards.

  • Traditional Gas Station Cards. The traditional type of branded gas station card operates more like a store card than a general gas credit card, because you can only use it to buy gas at that gas station brand. You get discounts that generally range from 3 cents to as much as 10 cents per gallon, applied either at the pump or as credits on your monthly statement. Some cards come with introductory offers that provide still-higher discounts for a limited period.
  • Gas Station Credit Cards. Some station brands also offer gas credit cards that are co-branded with one of the major credit card networks. You still get discounts when you spend at the brand’s gas stations, but you can also use these cards to make purchases anywhere that accepts the credit-card network. When you use the cards at those locations, you earn further rebates or per-gallon cash discounts on the brand’s fuel.

 

How Do General Rewards Gas Credit Cards Work?

General rewards credit cards are not associated with any specific gas station brand. These typically earn you rewards on most purchases, including fuel purchases at gas stations—though not in all cases, so you may need to read the fine print. The type of reward varies, depending on the credit card. Some provide a cash rebate that appears on your monthly card statement. Other cards provide points, typically worth at least 1 cent each, that you can redeem for travel or other benefits.

 

The rewards can translate into significant gas savings:

  • Some cards offer 2% or 3% in cash rebates for gas purchases, for example. If gas prices reach $3 per gallon, a 3% cash rebate means you get 9 cents back for each gallon, purchased at any gas station.
  • Many of these cards offer cash rebates or points for most other purchases, including other travel costs and everyday grocery shopping.
  • Others provide benefits such as car rental insurance and extended warranty coverage.
  • Some cards have introductory offers that deliver additional cash rebates if you spend a certain amount in the first few months.

 

Why You Should Consider a Branded Gas Credit Card

  • There’s typically no annual fee
  • They’re easier to obtain
  • You may prefer a specific brand of gas 

 

Branded gas credit cards typically have no annual fee, unlike many general cards, and they can be easier to get if you have a less-than-sparkling credit history. If you prefer a particular gas brand and pay your bills on time, a branded gas station card may have increased appeal.

 

Why You Should Consider a General Rewards Credit Card

  • Potential for greater benefits overall
  • They often have lower interest rates

 

Some experts say that general rewards credit cards offer greater benefits than branded gas station cards for many people.3 That’s because you can use the points or cash back rewards in many ways, not just to lower your gas costs. Furthermore, you earn those rewards with most types of spending, not just when you pay at the pump. Many general rewards credit cards also have lower interest rates than branded gas station credit cards. And, with any type of credit card, interest payments can wipe out other benefits if you don’t pay the balance every month

 

Don’t Forget: The Price of Gas Matters

Balancing the benefits of each type of card depends on the price of gas, to some extent. Because a general rewards card provides a discount that’s a percentage of the purchase price, the cash value of the discount grows when gas prices rise. But when gas prices are low, a branded gas credit card that discounts gas by a fixed number of cents per gallon may look best.

Which gas credit card works best for you?

Branded gas credit cards

  • Provide discounts on only one brand of gas
  • Usually have higher APR
  • Generally have no annual fee

General rewards credit cards

  • Earn and use cash back or points rewards in many ways
  • Generally have lower APR
  • May come with an annual fee 

 

The Takeaway

Gas credit cards can cut your household gas costs by providing discounts, cash back, or other rewards. Branded gas station credit cards generally have no annual fee but they only provide discounts at that company’s gas stations, so they may appeal to people who seek out a specific gas brand when refueling. General rewards cards offer cash back or other rewards that you can earn and use more flexibly, and so may be the best gas credit card for many people.

Mike Faden

Mike Faden has covered business and technology issues for more than 30 years as a writer, consultant, and analyst for media brands, market-research firms, startups and established corporations.

 

All Credit Intel content is written by freelance authors and commissioned and paid for by American Express. 

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