In the tumbling economy, cash back and gas reward credit cards are becoming more popular than ever. The reason? Both give you money back in your pocket on important everyday purchases, although there is a difference between the two. The best gas credit cards usually earn very high rebates–5% plus–on gasoline purchases, and may earn 1% on other purchases. Standard cash back credit cards, on the other hand, earn between 1% and 5% cash back and higher rebates on purchases like groceries, hotel stays, travel and more. To get the most money back, take a good look at your spending habits to decide which credit card is right for you.
Should you get a gas rewards credit card?
Gas credit cards can be a great way to save money, especially for people with long commutes or those that drive vehicles that drink fuel like it’s water. People that benefit most from gas cards are those that drive large personal vehicles, use pick-up trucks or vans during business, individuals that are required to drive as a living and anyone that finds themselves spending $100 plus monthly on fuel. If you typically put your fuel purchases on credit, switching to a gas card may be just the thing you need to start maximizing your savings.
One of the first considerations if you’re thinking about a gas card is this: do you tend to stick with one gasoline brand or do you shop at whichever station has lower prices? For most people, non station-specific cards will serve them better and have better terms and rewards. One of the most popular choices is the Discover Open Road card, which earns 5% cash back on the first $100 in gas purchases each month, along with 1% back on everything else after spending exceeds $3,000. The TrueEarnings credit card from Costco and American Express, on the other hand, earns a solid 3% cash back on all gasoline purchases up to $3,000 annually (afterward you’ll earn 1%). In addition, you earn 3% back at restaurants, 2% on travel and 1% back everywhere else.
If you want to stick to one station, a good pick is the BP Visa card. This card earns a whopping 10% cash back on BP fuel purchases, 4% back on eligible travel and dining and 2% everywhere else for the first two months. Afterward, all rebates are cut in half, still leaving you with 5% back on gasoline.
To earn the most in rebates from gas cards, look for a card that has no annual fee. Make sure you put every single gas purchase on your credit card and pay the balance immediately. Some people find it’s convenient to use online banking to schedule an automatic payment each week or even each day to ensure all purchases are paid for. Whatever method you use, make sure you avoid any interest accruing on your account. It’s also a great idea to look for cards that offer you sign-up bonuses, such as an automatic $50 credit when you first use your card or an introductory period during which all rebates are doubled. You can also maximize your savings by using a website that searches for the best gas prices in your area.
Why traditional cash back cards may be the way to go
If, however, you don’t drive a car that requires much fuel or don’t do a lot of driving, a gas credit card may not be for you. To save more money on purchases like groceries, hotel stays, and everything else, look for a cash back card that earns the most rewards on purchases other than fuel.
Most cash back credit cards work by offering you the biggest rebates on “everyday purchases.” These usually include grocery store purchases, fuel, department store purchases and restaurants. What’s great about cash back cards is they can work for anyone that has the responsibility to pay their balance in full each month. Here are just some of the things you can earn rebates on with a cash back card: grocery shopping for your family, buying new furniture for your home, remodeling your bathroom, purchasing a new television, and going on vacation (you can save on the gas, travel and expenses!).
The Discover More card is one of the best all-around cash back credit cards because it allows you to earn up to 5% on everyday expenses, including purchases at the supermarket and department stores. Along with these high everyday purchase rebates you can expect to earn at least 1% back on all of your purchases. What’s more, you can also use Discover’s ShopDiscover store online to earn rebates of up to 20%!
So which is better for you?
Gas cards and cash back cards are really very similar. What’s best for you depends on how you spend your money and what’s going to be more convenient for you. Are you comfortable with putting everything you buy on your credit card and paying it immediately in full? Do you spend often on everyday purchases? If so, a regular cash back card may be perfect for you. Do you drive often and wish you could save more money on gasoline? If that sounds more like you, try applying for a gas card.
Some things to beware
Basically, cash back cards and gas rewards cards are just different versions of the same principle. There are some things that apply to both cards. First, never get either type of rewards card if you ever carry a balance on your credit card! The APR on cash back and gas rebate cards are much higher than on traditional cards. Getting even 5% cash back is nothing if you’re paying 20% interest to carry the balance. Secondly, always look for a cash back or gas card with no annual fee. There are plenty of great cash back cards out there that don’t charge you annually so why get one that does? It’ll just eat up your rebate savings. Lastly, don’t take what you read in credit card advertisements at face value. Always read the fine print to understand what you’ll be earning. For example, a credit card that advertises “up to 5% cash back” may have a tiered system that starts at 0.25%. You may not earn 5% cash back until you’ve spent nearly $15,000!
Loading ...
