Should You Apply for a Gas Rewards Credit Card?

If you spend time in your car every week, you’re no doubt feeling the impact of high gas prices on your wallet. There’s a way to decrease the pain. You can save money on high gas prices by using a gas rewards credit card.

What Is a Gas Rewards Credit Card?

There are different types of gas rewards credit cards that offer discounts on gas purchases. There are cash back and general rewards credit cards from financial institutions that offer rewards in specific categories, such as for gas purchases.

[Read: Best Gas Credit Cards.]

And there are also gas credit cards that are branded by a gas retailer, such as Exxon Mobil. Although station-branded credit cards sometimes have good rewards programs — such as a reduced price per gallon at the pump — they tend to have higher annual percentage rates, less flexibility and fewer perks than cards from major issuers.

How Gas Rewards Credit Cards Work

When you get gas, you simply pay for your purchase with your gas rewards credit card. Every gas credit card has its own unique rewards program. So be sure you read the fine print carefully and understand how to use the card to receive the most benefit. And keep in mind that some cards will have a limit on the amount you can spend and still receive rewards. For example, you might get 5% cash back initially, but after you spend $1,500 on gas, your rewards rate would drop to 1%.

You also need to understand what redemption options are offered. In many cases, you can get a statement credit, which can be used to directly reduce your balance. Many rewards credit cards offer welcome bonuses for new cardholders, which can also be used to decrease your balance or might be deposited in your bank account.

[Read: Best Cash Back Credit Cards.]

Here are a few more things you need to know about credit cards that offer gas rewards:

— Many cash back credit cards include gas purchases in their rewards program. Other credit cards allow you to customize your rewards program, and you can choose an option for gas purchases.

— Cash back might be earned as points, even though you can redeem them for cash. Generally, each point is worth 1 cent, but this varies by card. Read the disclosure statements to learn how to make the most of the value of each point.

— Some general rewards cards might temporarily offer savings on gas purchases to current cardholders. For example, you might get 3% off gas purchases for the next three months. Watch your email for announcements on new offers.

[Read: Best Rewards Credit Cards.]

Pros and Cons of Gas Rewards Credit Cards

As with most things, using a gas rewards credit card has advantages and disadvantages.

Pros

— Using gas rewards credit cards can help you save money on rising gas prices.

— Rewards credit cards also can help you save on other everyday expenses, such as on groceries and at drugstores. Use cards strategically to save even more.

— Using credit cards responsibly helps you build credit and improve your credit score.

Cons

— Rewards credit cards have higher interest rates. If you carry a balance from month to month, you can end up in debt.

— It’s tempting to overspend when you use a credit card. Prevent this by having a budget and tracking your spending. You’re spending more on gas, so you’ll need to cut expenses elsewhere.

— Some of the best rewards credit cards come with annual fees. Make sure you’ll earn enough rewards to make the fee worth it.

More from U.S. News

What Is the Grace Period on a Credit Card?

Carry a Credit Card Balance vs. Pay in Full: What’s Better for Your Credit?

How Do Credit Cards Work?

Should You Apply for a Gas Rewards Credit Card? originally appeared on usnews.com

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