According to AAA, as of July 2014, the national average for regular unleaded gasoline is 14 cents higher than it was a year ago, making it the highest summer average in the last six years.
But you probably don’t need a statistic to know that! You see it at the pump everyday.
Whether you live in South Carolina (with the lowest gas prices) or Hawaii (the highest), one of the best ways to reduce the sting of high gas prices is to use a gas credit card. Using these cards will earn you rewards on your gas purchases and you can redeem those rewards for cash.
If you commute frequently, a gas card is definitely something you want to consider. The best gas credit cards are actually cash back credit cards. This means you should select a card that not only gives you points or a percentage back for your gas purchases, but also offers high rewards on non-gas purchases.
There are branded gas credit cards, but unless you always go to the same gas station, it’s tough to get significant long-term value from these cards. The cash back cards can earn you the highest amount of rewards possible even if you use the card outside of a gas station.
What Makes a Good Gas Credit Card?
- Offers 3-5% cash back on gas purchases
- Offers 3-5% gas rewards in more than one quarter
- Also offers 3-5% cash back for non-gas-related purchases
- Can be used at any gas station
- Bonuses and/or perks easily make up for the annual fee, if any
The Top 4 Gas Credit Cards
Gas Perks: The Blue Cash Preferred® from American Express is excellent for frequent drivers since it offers 3% cash back on gas purchases — all year round. There is no cap on how much you can earn.
Other Perks: You get 3% cash back on select U.S. department stores and 6% cash back on groceries (with a $6,000 cap). All other purchases get you 1% back. When you sign up, you get $150 back after you spend $1,000 on purchases in the first three months.
What else you should know: There is a $75 annual fee. However, the $150 sign-up bonus will cover you for two years, and the card will pay for itself in following years if you spend at least $50/week on groceries.
Gas Perks: The TrueEarnings® card from Costco and Amex card will give you 3% cash back on up to $4,000 of gas purchases each year. After you reach the $4,000 limit, you get 1% back.
Other Perks: You also get 2% at restaurants and travel-related purchases, and 1% on all other purchases.
What else you should know: You need to be enrolled in Costco membership, which costs $55 every year (Executive Membership is $100). There is no additional annual fee with this card. Rewards are issued as a yearly coupon and is only redeemable at a U.S. Costco location for merchandise or cash. You receive your reward coupon in February and must use it by August of the same year.
Gas Perks: The PenFed Platinum Rewards Visa® gives you five points for every dollar in gas purchases, which is equivalent to 5% cash back. There is no limit to how many points you can accrue.
Other Perks: Cardholders receive three points per dollar (3%) at supermarkets and one point per dollar (1%) on all other purchases.
What else you should know: There is no cap on the amount of points you can accumulate, but they do expire five years from the end of the month in which they were earned. In addition to getting cash back, you have the option to redeem points for rewards like hotels, airline travel, and car rentals. There is no annual fee, but you do have to join Pentagon Federal for $15.
Gas Perks: You get 5% cash back on gas purchases, up to $1,500 spent quarterly, during Q1 (January-March) and Q3 (July-September). The rewards you gain never expire. Gas purchases made outside of the designated quarter or after you reach the $1,500 limit get you just 1% back.
Other Perks: The rotating quarterly categories for 2014 are as follows. The $1,500 cap applies to every quarter: Q1 (January 1 – March 31): Gas stations, movie theaters and Starbucks stores Q2 (April 1 – June 30): Restaurants and Lowe’s home improvement stores Q3 (July 1 – September 30): Gas stations and Kohl’s Q4 (October 1 – December 31): Amazon.com, Zappos.com and select department stores. Any other purchases get 1% cash back.
What else you should know: There is no annual fee. You earn a $100 bonus after you spend $500 on purchases in your first three months.
Tips For Selecting The Best Gas Credit Card
1) Don’t select a credit card issued by specific gas station unless you are absolutely sure you’ll only pump gas at the affiliated station and you’ll spend enough to qualify for their highest rewards earning rates. Generally, though, people don’t want to be restricted to one gas station company. Gas station credit cards also do not offer cash back for other categories, such as groceries or shopping, which limits the amount of rewards you can earn over the year.
2) Always pay off your balance. If you don’t pay off your balance and start accruing interest, it will wipe out any benefit of earning cash back from a gas card.
3) Pair two cards together to maximize gas rewards. If your gas credit card has a cap on how much you can earn through gas purchases each year, or if the perk is only offered in certain quarters, pair that card with another rewards card that will give you 2% or more cash back for the remainder of your gas purchases.
For example, if you own the TrueEarnings® card from Costco and Amex and reach the $4,000-limit mark, the 3% cash back will go down to 1% for all gas purchases thereafter. So make the rest of your year’s gas purchases on, say, the Barclaycard Arrival Plus™ World Elite MasterCard®, which gives you 2x points on all purchases.
You could also pair the Chase Freedom® with the Blue Cash Preferred® from American Express. This would ensure you’ll always get 3% cash back on gas purchases with the Blue Cash (when the Freedom® doesn’t have gas stations as a 5% category that quarter). During the six months the Freedom® has 5% cash back on gas stations, you use it until you hit your $1,500 limit for that quarter.
Mike Jelinek is a financial contributor for The Simple Dollar and head of content at Reviews.com. He writes about personal finance topics, like credit cards, and finds the truth about a variety of products and services across different industries.