Gas Rebate Credit Cards May Not Be The Best For Reducing Your Gas Costs

Gas Rebate Credit Cards May Not Be The Best For Reducing Your Gas Costs

Gas rebate credit cards are presented to you with the promise of getting money back for purchases you make at gas stations. Typically they offer larger rewards at the beginning to entice you to apply for the card but you soon find out that the larger rewards are usually only for a short time.
After the initial period those cards offer much smaller rewards. Your 5 or 6 percent rate goes down to 1 or 2 percent. Even at that, you may say to yourself, something back is better than nothing. That may not be true.

If you are a typical driver, you drive a car that gets around 25 miles per gallon fuel economy. You drive about 15,000 miles per year and consequently you use about 600 gallons of fuel per year.

Your annual fuel cost is around $1,500 dollars per year depending on the fuel cost but at around $2.50 per gallon that's your cost. That number in itself is eye opening, that you spend $1,500 per year on gas. That's for one car. A two car family would spend double.

How much are you getting back as your 5% reward? At $1500 per year in gasoline costs, you are getting $75 back. Now if the credit card changes the rate after 3 months to 2 percent (which is very common) you are only getting back $41.

If you have one late payment during the year and the credit company slaps you with a late charge of $39 you just gave up your whole years gas reward. So are you really getting much of a deal here?

Contrast that with Customer Loyalty gas cah back programs that pay anywhere from $100 to $300 per year. Using the same numbers, if you happen to be part of the $300 cash back for gas customer loyalty program you get back $300 for your annual gasoline expenditure of $1500. That equates to a 20% rebate. The best part is, it is not connected to a credit card so there is no chance of a late charge penalty.

Which would you rather have, a $41 refund for fuel or a $300 refund for fuel? Would you rather get a 2% to 5% rebate or a 20% rebate.

The next time you consider getting a gas rebate credit card think about how much you are actually getting back. Think about what that card is actually costing you and how much you actually find in your pocket after using the card for a year. Then think about other alternatives that may make more sense in helping you to reduce you gas expenses.