How Do Gas 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.

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 5 cents to 10 cents per gallon.² 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.

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 card’s terms and conditions. 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%, 3%, or even 4% cash back for gas purchases.³ For example. If gas prices reach $3 per gallon, 3% cash back 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.

General rewards credit cards typically offer greater benefits than branded gas station cards for many people. 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. And, with any type of credit card, interest payments can wipe out other benefits if you don’t pay the balance every month.

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.