Gas Station Credit Cards Might Be a Bad Deal

Source: Thinkstock

Source: Thinkstock

If you’re a car owner, then you know how expensive it can be to own a vehicle. General maintenance fees, insurance, and gas prices can really cut into your budget. Bankrate’s 2014 car cost study, which took a look at states with the highest and lowest car ownership costs, finds that costs can range anywhere from a high of $2,705 to a low of $1,942 per year.

If you’re considering a gas station-branded credit card so you can lower your costs, you might want to rethink that choice. A new CreditCards.com survey reveals these cards might not be so great, typically charging higher interest rates and offering the bare bones when it comes to rewards and sign-up bonuses.

CreditCards.com conducted a survey of the 20 largest major gasoline-brand credit cards. The results showed the average APR for these cards is 24%, which is a far cry from the average 15% for most general-purpose cards. The report also shows gas cards generally offer a 10-cent discount per gallon (roughly a 4% return at today’s gas prices) but the reward will not be as good when gas prices rise, causing the percentage to decrease.

In addition, the few gas station cards that offer sign-up bonuses usually deduct a couple of cents per gallon for the first 60 or 90 days. However, this is not so generous when compared with general-use credit cards, many of which offer sign-up bonuses worth hundreds. Many gas cards also subject cardholders to minimum spending thresholds, maximum limits, and tiered rewards programs, which may reduce the tiny benefit you manage to scurry away with.

You might be wondering why gas stations even bother to offer these cards, so we asked CreditCards.com’s senior analyst Matt Schulz.

“For the gas stations, it’s just about getting people to the pumps. Gas cards that offer discounts per gallon can help spur loyalty and generate repeat business for gas stations,” says Schulz.

Some consumers might benefit

Even though gas station credit cards are generally not a great deal, there are some situations where they may work in your favor. For example, gas station credit cards might work for you if you’re attempting to rebuild your credit.

“Gas cards can be a decent choice –and are often the only choice–if you are rebuilding your credit or even starting it from scratch. Someone with poor credit could get one of these cards, make regular on-time payments for a few months, keep their balance low and then graduate to a card with more desirable terms once the credit score climbs to higher levels. The high APRs mean that it’s absolutely imperative to pay your balance off every single month, but if you do that, they can be a decent credit rebuilding tool,” says Schulz.

Explore your options

The following alternatives are recommended in the survey:


Chase Freedom

  • 5% cash back on gas purchases for the summer
  • $100 sign-up bonus
  • No annual fee

BankAmericard Cash Rewards

  • 3% cash back on gas purchases throughout the year
  • $100 sign-up bonus
  • No annual fee

Capital One Venture Rewards

  • 2 miles per dollar spent anywhere
  • 40,000-mile sign-up bonus (a value of $400)
  • No annual fee for the first year

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