Should I Apply for a Gas Station Credit Card?
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In a recent study, Scientific American found that drivers in the United States had driven 3.15 trillion miles in 2015, which is equal to “around 337 round trips from Earth to Pluto.”
If you are one of these drivers, you have likely seen offers for gas station credit cards and wondered if it would be worth applying. There are a number of benefits to owning a gas station credit card, but you will want to weigh the pros and cons before opening an account.
Enjoy Discounted Fuel and Other Rewards
Gas station credit cards often offer you discounts or cash back when you buy fuel or other items. The Shell Drive for Five®, for example, offers cardholders an introductory rate of 25 cents off every gallon* for the first two months. After that, card members will get 5 cents off every gallon*. There is no annual fee for the card, and you can receive multiple cards for free, which means everyone in your family can enjoy the discount. The ExxonMobil™ Smart Card also charges no annual fee and offers cardholders 6 cents off** every gallon.
Build or Rebuild Your Credit
If you have less-than-stellar credit, you may have a difficult time qualifying for a rewards credit card. However, store-branded credit cards, including gas station cards, are easier to get. While they generally carry a very high interest rate, if you use them intelligently, you may be able to build or rebuild your credit.
To improve your credit, charge your fuel to your gas station credit card and then pay off the balance in full, on time every month. After a year of doing this, your credit will likely have increased enough to obtain an even better rewards credit card.
Low Limit = Little Trouble
Since gas station credit cards generally have low limits and can only be used at specific filling stations, it is unlikely that you will rack up debt that you’re unable to pay back. This means you will be able to build your credit with minimal risk. Additionally, since you should have room in your budget for weekly fuel costs, you will be using the credit card for an expense for which you have already planned.
Con: You May Earn Better Rewards with Another Credit Card
If you already have excellent credit, you may be better off with a cash back credit card than a gas station credit card. If, for example, your rewards credit card offers 3% back on gas purchases, you’ll earn 9 cents when gas costs $3 per gallon, which is better than the 5 or 6 cents offered on a gas station credit card. Additionally, with a general rewards credit card, you will not be limited to making purchases at specific gas stations.
Things to Consider
Before applying for a card, make sure you are choosing one with no annual fee. You will also want to make sure the credit card issuer reports information to the three credit bureaus. Nearly all do, but it is worth checking, especially if you want to use the card to improve your credit. Finally, choose a card from a gas station where you regularly fill-up. If a company is offering an attractive deal, but there is no station near you, the card will be of little use.
*Subject to credit approval. Account must remain open and in good standing to qualify. Credits will be automatically posted to your monthly billing statement with qualifying purchases.
**Subject to credit approval. Rebates will be reflected as a statement credit on your billing statement with qualifying purchases. Terms and conditions of the ExxonMobil Smart Card Rebate Program apply.