Some cards pump cash back into wallets
Forget the quest for airline miles. Today’s hot credit card perk is at the gas pump.
Drivers can get 3% or more of their fuel bills returned to them from card giants MasterCard Inc., Visa International and Discover Financial Services as well as large gasoline retailers including Shell Oil Co. and Exxon Mobil Corp.
“A number of cards are increasing the rebates, specifically rebates on gasoline, because they see how consumers are concerned about gas prices and how much it’s costing them,” said Matt Mills, founder of Seattle-based E-Wisdom.com, an Internet site that tracks credit card offerings.
Such offers come with plenty of caveats and fine print. But in California, land of high gasoline prices and long commutes, the deals are worth considering.
“A lot of consumers aren’t aware that these kinds of cards exist,” said Curtis Arnold, chief executive of Cardratings.com, a card reviewer based in Little Rock, Ark. “But if you go out on the street and ask someone, ‘Instead of you paying $3 a gallon, you can pay $2.85, are you interested?,’ then people perk up.”
Motorists already are big on using plastic at the pump. As U.S. fuel prices pushed steadily higher, the percentage of gasoline purchases made with a credit or debit cards jumped to 65% in 2006 from 53% in 2003, according to the National Assn. of Convenience Stores.
David Wagner, a 36-year-old San Diegan, earns points on his Citibank reward card every time he fills up. The bonuses aren’t as generous as some of the newer gasoline-focused cards, but he likes racking up points while making everyday purchases.
“The gasoline can add up because everybody needs gas if you have a car,” Wagner said.
For consumers, there are three types of specialty cards for gas: Traditional branded gas-only cards issued by oil companies; newer general-purpose cards cosponsored by Shell and gas sellers; and general-purpose credit cards offered by banks, MasterCard, American Express and others. Consumer credit experts give the highest marks to gas reward cards that aren’t issued or cosponsored by oil companies.
Most of the general-purpose gas-rebate cards carry a MasterCard, Visa or Discover logo and, like regular credit cards, can be used at any store that takes those kinds of cards. The difference is that gasoline purchases come with pumped-up rewards based on the amount of fuel you buy or how much you spend on gas.
The cards typically offer a rebate or cash-back reward equal to 3% of your gasoline purchases, but the figure can go as high as 10% or as low as 1%. The average savings amounts to $3 a fill-up and more than $150 a year for people who use a tank of gas a week, according to FuelBudget.com.
To qualify for the best cards, you need a good or above-average credit rating, which equates to a credit score of 700 or higher, Arnold at Cardratings.com estimates.
Most cards don’t charge an annual fee, but they come with above-average annual interest rates. Some rates top 20%, so if you don’t pay off the balance each month, you will quickly negate your gas rebate.
And then there are the small-print details that often determine the true usefulness of the card.
“The bottom line is, understand how the reward structure works and then, just as important, understand how the redemption structure works,” Arnold said. Check for limitations such as reward caps and rewards that expire before you can use them.
“And watch those introductory offers,” he said. “These gas rebate cards are notorious for giving a rebate that blows you away on paper, but then you look at the fine print, and it’s only for 60 to 90 days.”
Some credit card issuers and gas stations put a block on fuel purchases above a set limit, such as $50 or $100, or a hold that counts against your credit limit until it is cleared.
“People hate the blocks, and rightly so,” said Emily Davidson, who edits a blog for Credit.com. Between high gas prices and huge gas tanks on sport utility vehicles, she said, “it’s easy to have a $75 purchase of gas.”Many general-purpose cards grant the best rewards only for purchases made at stand-alone gas stations. That means you probably won’t get the big rebates if you buy gas at a warehouse club, grocery store or any other place where the primary business isn’t fuel sales.
Michael Shames, executive director of the Utility Consumers’ Action Network, said such limitation underscores a potential drawback to the rebate cards.
“Those gas stations that take credit cards usually have higher prices, so it can be a wash,” he said. “It’s still a better deal to use cash and buy at independent” gas stations.
One exception is American Express’ TrueEarnings card available to members of Costco. It comes with 2% to 3% rewards for travel and restaurants but also offers 1% rewards for any Costco purchase, including gasoline. After an interest-free introductory rate for three months, it carries a variable 17.24% annual rate, with the rewards paid out only once a year in the form of a Costco coupon redeemable for cash or merchandise.
On many Internet sites that rate gas-related credit cards, Discover’s Open Road card is among the top picks.
That card offers 5% cash back on gas and auto maintenance spending and up to 1% on other purchases, and the rewards can jump to as much as 20% if you redeem your bonus as a gift card to certain well-known partner stores. It carries no annual interest rate for the first six months, then jumps to 10.99% to 18.99%.
Other popular cards include the Chase PerfectCard MasterCard and the Gas Rewards Platinum Edition Visa offered by First National Bank of Omaha.
Some also like Citibank’s Driver’s Edge Platinum Select MasterCard, which declares that “ ‘frequent driver’ is the new ‘frequent flyer.’ ” That card, which carries a maximum annual payout of $1,000, includes 6% rebates on grocery, drugstore and gasoline purchases for the first year and 3% after that. It also awards users $1 in “driver rebates” for every 100 miles driven.
Oil companies have jumped in too. In an attempt to lock in loyalty among customers who prefer multipurpose cards, many of the largest fuel retailers offer multiuse MasterCard and Visa cards bearing an oil company logo.
Shell, which launched its first MasterCard in 1992 with a 3% rebate, was a pioneer among its oil company brethren. A year later, it boosted the offering to 5% cash back on gas purchases at its stations.
“We know that if we can get our card in a customer’s wallet, they’ll buy more frequently from us,” said Carolyn Yapp, Shell’s payments and loyalty manager. Customers have earned $100 million in rebates under the 5% rebate program, she said.
To rival the big card companies, however, Shell and the others will have to get the attention of customers such as John Scarpelli.
He filled up recently at a 76 station in northern San Diego County and paid with a reward card that he said gave him a 2% cash rebate. Scarpelli eyed a pump-top sign touting a 60-day 15% rebate program offered by ConocoPhillips, which owns the 76, Conoco and Phillips 66 gasoline brands, but he wasn’t wowed. With a shrug, Scarpelli said, “I haven’t looked at them that much.”
The primary drawback to the oil-company-sponsored cards is that they apply to a certain brand of gasoline and they limit you to credits at their outlets.
“I would only recommend those if you’re loyal to that gas company,” Arnold said.
For those with poor or below-average credit, there is still the basic gas card that has been around for decades.
Such gas-only cards have steadily lost ground to general-purpose cards. That’s because the old-style cards often come with higher interest rates and low credit limits, include few or no rewards and usually are restricted to use at gas stations that sell the card issuer’s brand of gasoline.
But they still play a useful role in the credit card market, Arnold said.
“The benefit of those cards is that the credit underwriting requirements are not nearly as stringent . . . so for someone who’s trying to build their credit, it’s a great thing,” Arnold said. “They’re going to give you a lower line of credit, but they’ve got a pretty good reputation. They aren’t going to nickel- and-dime you with all of those fees.”
The gas-card option is particularly valuable now because the recent crash in the sub-prime mortgage market has made credit hard to come by for people with a shaky credit history, he said.
Nearly all of California’s most popular brands offer gas-only cards for consumers, and many offer similar cards for businesses.
Shell, which boasts that it has more active credit card accounts than any other oil company operating in the United States, has a promotion on its gas-only card that offers new applicants as much as 25 cents off the price of a gallon of gas, with a cap of $25 off Shell purchases, over the first three months.
The deal is available through September. After 90 days, the card offers no additional rewards. It has no annual fee but carries a hefty variable annual interest rate currently listed as 23.24%. Chevron is promoting a limited-time offer that could yield new card customers as much as $30 in credits, providing they buy at least eight gallons of Chevron or Texaco fuel twice a month over the first six months.
All of the cards have important restrictions and caveats. So remember the most crucial warning: Read the fine print.
--
elizabeth.douglass@latimes.com
Times researcher Scott Wilson contributed to this report.
--
(BEGIN TEXT OF INFOBOX)
Tips on picking a card
Read the fine print on every offer and compare details.
Look closely at the redemption process. The best rebates appear on bills automatically, but many others leave it to you to make phone calls, redeem coupons or visit websites to cash in on the deals.
Know your fuel-buying habits and pick a card that fits your needs.
Avoid reward cards if you don’t pay off the balance every month. You are better off with a card with low interest rates.
Remember that rewards can be fleeting. Some bonuses expire, late payments or defaults can wipe out accumulated benefits, and card companies can change the rules for earning and using bonuses.
Enjoy introductory offers but make sure you know what happens to the reward and interest rate terms after the sexier benefits end.
Stay away from cards with annual fees. There are plenty of good cards without them.
Be wary of credit cards that place temporary holds or blocks of $75 or more on your credit line even if your fill-up doesn’t cost that much.
Skip the gas-only cards unless you want to keep your gasoline purchases separate from other spending or you need to establish or rebuild your credit.
Source: Times research
--
Online resources
www.cardratings.com
www.credit.com
www.pumpandsave.com
www.cardfusion.com
www.e-wisdom.com
www.creditorweb.com
www.fuelbudget.com
www.cardtrak.com
www.cheatincorporated.net
www.cheapfillups.com
www.bankrate.com
www.aba.com/aba/documents /press/ccguide_62207.pdf
--
Gas and go save: a sampling of offers
Card: Chevron/Texaco
APR for purchases: 21% to21.9%
Penalty rate: 25.9%
Maximum late fee: $25
Grace period (days): 20 to 25
Rebates: $5 back a month for first six months when you fill up twice (minimum eight gallons) a month
Others: An upgraded Premium Card has a $25 annual fee and includes discounts on hotels, cash back on airline and car rentals (when you use members’ reservation service); no-fee traveler’s checks.
--
Card: Valero
APR for purchases: 20.24%
Penalty rate: 28.24%
Maximum late fee: $29
Grace period (days): 20
Rebates: No
Others: Charge as much as $150 on snacks, groceries and other merchandise.
--
Card: ExxonMobil Personal Card
APR for purchases: 23.24%
Penalty rate: 28.24%
Maximum late fee: $29
Grace period (days): 26
Rebates: No
Others: Includes Speedpass key tag to pay at pump.
--
Card: ExxonMobil Mastercard
APR for purchases: 14.24% to 18.24%
Penalty rate: 32.24%
Maximum late fee: $39
Grace period (days): At least 20
Rebates: 3% back at Exxon and Mobil stations, 1% back on other purchases; applicable only to future Exxon/Mobil purchases
Others: Includes Speedpass key tag to pay at pump.
--
Card: Shell Personal Card
APR for purchases: 23.24%
Penalty rate: 32.24%
Maximum late fee: $29
Grace period (days): 25
Rebates: No
Others: An upgraded Select Member card has a $25 annual fee and includes 10% rebate on hotels and motels, 5% back on airline and car rentals, and hotel discounts when you use members’ reservation service.
--
Card: Shell MasterCard
APR for purchases: 16.24%
Penalty rate: 32.24%
Maximum late fee: $39
Grace period (days): At least 20
Rebates: 5% back on Shell gas and Jiffy Lube purchases; 1% back on other purchases
Others: $20 annual fee after first year but waived every year you make nine or more Shell gas purchases.
--
Card: Phillips 66-Conoco-76 Personal Card
APR for purchases: 23.24%
Penalty rate: 32.24%
Maximum late fee: $29
Grace period (days): 25
Rebates: No
Others: For $29 annual fee, Premium Card includes 10% rebate on hotels and motels and 5% back on airline and car rentals when you use members’ reservation service.
--
Card: Phillips 66-Conoco-76 MasterCard
APR for purchases: 16.24% to 20.24%
Penalty rate: 32.24%
Maximum late fee: $39
Grace period (days): 20
Rebates: 4% back on purchases at Phillips, Conoco and 76 stations; 1% back on other purchases
Others: Maximum rebate is $50 monthly.
--
Card: Discover Open Road Card
APR for purchases: 10.99% to 18.99%
Penalty rate: 28.99%
Maximum late fee: $39
Grace period (days): 25
Rebates: 5% back on gas and auto maintenance purchases; 5% to 20% back at selected online retailers; as much as 1% back on other purchases
Others: No interest for purchases during first six months.
--
Card: Chase PerfectCard
APR for purchases: 14.24% to 23.24%
Penalty rate: 32.24%
Maximum late fee: $39
Grace period (days): 20
Rebates: 3% back on gas purchases and 1% back on other purchases
Others: No interest for purchases during first six months.
--
Card: Gas Rewards Platinum Edition Visa
APR for purchases: 9.99% to 13.99%
Penalty rate: 31.82%
Maximum late fee: $39
Grace period (days): 20
Rebates: 5% back on gas purchases for three months, then 3% back; 1% back on other purchases
Others: APR is 1.9% for first 15 months.
--
Notes: Interest rates are current; they will change monthly; No annual fee for these cards except where noted; Penalty rate will be applied each month after customer is late in paying or goes over limit; Grace period applies only to customers who pay off balance in full each month.
Source: Times research
