Gas Rewards Credit Cards
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There are many types of rewards credit cards available, each offering different benefits to the cardholders. Some people prefer to use travel rewards credit cards and earn travel points, while others like the free rebate that cash back credit cards offer. If you’re someone who travels by car a lot, though, then you may want to look at gas rewards credit cards instead. Here’s a quick look at how gas rewards credit cards work, and what the benefits and drawbacks of using them are.
What are gas rewards credit cards?
Gas rewards credit cards generally come in two varieties:
- Cards that give you cash back on gas purchases, regardless of where you buy the gas. Most credit cards with gas rewards fall into this category. Credit card companies track all purchases made at gas stations, in general, and credit your account accordingly.
- Loyalty gas rewards credit cards that give you gas rewards and discounts when you fill up at a specific gas retailer. This can come in the form of either immediate discounts on gas itself, or points that can be redeemed for goods and services at the retailer’s stations later.
Please note that this page only discusses credit cards that offer gas rewards, not the various loyalty programs offered by gas retailers, such as Esso Points or Petro Points, because you don’t need a credit card to earn those points.
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What rewards do gas credit cards offer?
Gas credit cards reward cardholders in a few different ways, depending on which of the two varieties of cards you choose from:
- Discounts on gas itself. This can take the form of an immediate discount when you’re buying gas, or the accumulation of points that can be used to buy gas at a later time.
- Rewards points that can be used to buy goods and services at the gas station or an affiliated store, such as car washes, or, in the case of Superstore Superbucks, groceries.
- Cash back on money spent at a specific gas retailer.
- Travel points, such as AIR MILES, when you buy gas.
Let’s look at a few examples of how this works.
Case study: Rachel’s gas rewards credit card
Rachel has the CIBC Petro-Points MasterCard, which she uses for fuel and other purchases. She buys an average of 120 litres of regular gas each month at Petro-Canada. In addition, she spends an average of $800/month at grocery stores and pharmacies, plus another $1,200/month at other retailers.
The rewards for using her gas credit card include:
- Discount of 2 cents per litre on gas purchases at Petro-Canada
- 5 Petro-Points for every RegularClean litre purchased
- 10 Petro-Points for every dollar spent at retailers other than Petro-Canada
- 15 Petro-Points for every dollar spent at grocery stores and pharmacies
- A 50% bonus on Petro-Points accumulated at Petro-Canada, and
- A bonus of 5,000 Petro-Points every time you charge over $1,000 to the card.
Petro-Points can be redeemed for a number of goods and services, such as:
- A Fuel Savers Gas Card (12,000 points), which saves the cardholder 5 cents per litre on up to 200 litres of fuel (a $10 value)
- A free car wash (8,000 points)
- Free song downloads (starting at 1,815 points)
Assuming she uses her Petro-Points solely for free gas, how much will Rachel benefit by using this gas rewards credit card?
|Purchase Category||Petro-Points Rewarded||Amount Spent/Month||Dollar Reward||Total Petro-Points Earned|
|Groceries & Pharmacies||15 Petro-Points||$800||N/A||12,000|
|All Other Retailers||10 Petro-Points||$1,200||N/A||12,000|
|120 Litres of Regular Fuel @ $1.25/litre|| |
In one month, Rachel spent $2,150 on her gas rewards credit card, but saved $2.40 on gas and earned 34,900 Petro-Points. To redeem those points for discounts on fuel, Rachel would cash in 12,000 Petro-Points for a Fuel Savers Rewards card from Petro-Canada. This card saves her 5 cents off up to 200 litres of gas, thus having a value of $10. The total dollar reward redeemed would then be $12.40 ($10 card and $2.40 on gas), and she would have 22,900 points remaining.
From there, how much Rachel saves on gas depends in part on how she spends her money. For instance, by spending $800 at grocery stores and pharmacies, Rachel earned 12,000 Petro-Points which can be redeemed for a gas card valued at $10. That’s a rewards value of $1.25 per $100 spent ($10/$800 x 100 = $1.25). Expressed as a percentage, that’s 1.25%.
Keep in mind, though, that Rachel also saves 2 cents per litre on gas. Assuming a gas price of $1.25 per litre, saving 2 cents is equivalent to a 1.60% discount ($0.02/$1.25). So, if Rachel buys gas at Petro-Canada, she will save 1.60% when she fills up, and then a further 1.23% (1.25% x [1 – 0.016]) when she redeems her Petro-Points for more gas. That’s a total fuel savings of 2.83%.
Savings will be less when she shops at retailers where she only receives 10 Petro-Points per dollar spent. In this case, to accumulate the 12,000 points necessary for the $10 fuel card, she must spend $1,200. To figure out Rachel’s reward on $1,200 of spending at these 10 Petro-Point retailers, we divide the eventual gas card benefit ($10) by the amount needed to obtain it ($1,200):
$10 eventual gas
card benefit ÷ $1,200 total spending =
We then multiply this by 100 to express the rate as a percentage:
$0.00833 reward 100% =
0.833% reward percentage
Rachel’s reward on these purchases is equivalent to 0.833%.
Case study: Derek’s cash back on gas rewards credit card
Derek has the Scotia Momentum VISA Infinite card. He buys 120 litres of gas per month at $1.25 per litre. In addition, he spends $400 per month at grocery stores, $100 at pharmacies and $1,000 at all other retailers. The card gives Derek 4% cash back on gas and grocery purchases, 2% cash back on pharmacy purchases and 1% cash back on purchases made at all other retailers. How much cash back will Derek receive per month, and how much of that is from paying for gas with his credit card?
|Purchase/Type of Retailer||Monthly Spending||Cash Back Rewards|
|Gas||$150||$150 x 0.04 = $6.00|
|Groceries||$400||$400 x 0.04 = $16.00|
|Pharmacies||$100||$100 x 0.02 = $2.00|
|All Other Retailers||$1,000||$1,000 x 0.01 = $10.00|
In one month, Derek spent $1,650 on his cash back credit card, and earned $34.00 cash back - $6.00 of which was from purchasing gas with his card. In total, his rewards works out to 2.06% cash back ($34/$1,650).
What kind of gas rewards credit card should I get?
As we’ve explained, there are two varieties of gas rewards credit cards. The first is really a cash back credit card that happens to have very good rewards for purchases of fuel at any gas retailer. The second rewards you for staying loyal to a particular gas retailer.
Generally speaking, you are better off going with cash back credit cards. These cards can give you up to 4% cash back on gas purchases, no matter where you buy your fuel. In addition, you will receive cash back rewards for other purchases. By contrast, loyalty gas rewards credit cards do not provide better fuel rewards than the cash back alternatives. Furthermore, these cards tie you to one company’s gas stations which may be inconvenient.
All in all, your best bet is to get a cash back credit card, as well as a loyalty card from the gas retailer you regularly visit; combining the two can help you both earn loyalty program points and cash back.
It’s all about the mileage
When you are buying a car, it’s wise to pick one that is fuel efficient and gives you the most bang for your buck. The same holds true for a gas credit card. As with all rewards credit cards, search for the one that gives you the best rewards for each dollar you spend. And to fully enjoy the perks of the card, remember to make a habit of paying off your balance in full and on-time each month.
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