I actually stumbled across Millionaire or Bust through David’s comment on my blog at Credit Card Forum. Recently, I had written a review of the Shell gas card and David pointed out something very sneaky about the rewards program which I wasn’t even aware of (I’ll tell you about in a moment). That sparked the idea for me to write this post about the most common tricks credit card companies will use to try and rip you on your gas rewards.
Trick #1: Paying at the pump vs. inside
Years ago I actually wasn’t aware of this and just assumed I got the same rewards, regardless of whether I paid inside or out. Unfortunately, that’s not how most of these cards work… they only count it as “gas” if you pay at the pump.
I’m not sure exactly the reason for this, because to the best of my knowledge the merchant processing fees are the same at gas stations regardless of where the customer pays. So I’ve come to the conclusion that the only reason they would do this is because they don’t want you earning your 3% or 5% on cappuccinos, Kit Kat bars, and all the other things you can buy inside.
Not every credit card has this stipulation, but the vast majority do, so just play it safe and pay at the pump so you get your extra rewards.
Trick #2: Reward ceilings
Most gas cards on the market have a ceiling/limit on the amount of gas rewards you can actually earn. Usually this is a monthly limit but sometimes it goes by quarter or year.
For example, in my review of the credit card from Costco I talk about how yes, the card does give 3% on gas, but it’s only applies to the first $3,000 spent annually in that category. Sufficient for some, but definitely not everyone!
When it comes to cards affiliated with a specific gas station, the rewards ceiling is usually much higher than a bank affiliated card. So if you are cool sticking with one station and drive a lot, than going with one of those will probably make more sense. The best gas station card is probably the BP Visa, because it gives 5% on gas with no ceiling at all! Plus, it gives 2% on dining and travel.
Trick #3: Not every station counts
Now the first part I’m about to talk about isn’t the banks’ fault, so I guess we can’t blame them for it.
Let’s be honest here… gas stations are notorious for being sketchy places. I’m talking about those which are independently owned and operated (and most are). A lot of times you will find them taking shortcuts to save a buck. Sometimes it’s relatively innocent, like being too cheap to let customers use the bathroom. Other times, owners will do some deceitful things like mis-classify their gas station as a different type of business with their card processing company (to get cheaper fees) and in turn, that means your purchase there might not be counted as being at a gas station! This problem isn’t a common one but I have heard about it happening a few times on my forum.
The second scenario when a gas station doesn’t count (and yes, the banks consciously make this decision) is for the stations you will find at warehouse stores, such as Sam’s Club and Costco. Although they don’t outright say this, my guess is the reason they structure it this way is because the warehouse stores have negotiated much lower processing fees, so profit margins are lower there for the banks, and hence, they don’t want to give you the extra rewards there.
For example with American Express (the exclusive payment network of Costco) if you pay with any AmEx cash back card other than the Costco credit card at their stations, you will only earn one-quarter of a percent.
Trick #4: Not spending enough on gas
Alright so we already talked about what you can expect if you spend too much on gas, but what if you spend too little? Well if you carry the Shell card, that might be a big problem!
As David pointed out to me, their new “Drive For Five” card promises to give 5 cents off per gallon… but only if you buy 45 gallons or more per month. As he commented on my blog, if you buy 44 gallons one month then you won’t get the 5 cent/gallon rebate, which would equal $2.20.
It certainly is sneaky for Shell to structure it this way. As far as I know, that is the only card that actually imposes a minimum spending on gas to earn rewards but now that they’re doing it, I wouldn’t be surprised if others follow.
Trick #5: Excluding certain types of fuel
If you fill-up with the 87, 89, or 92 grade of gasoline you should be okay. However, if you drive a vehicle that runs on diesel fuel then watch out, because there are a few programs on the market that don’t cover diesel purchases. The same can be said for airplane and boat fuel, but those two probably don’t surprise you.
I have written reviews for some of the best gas credit cards as well as the worst (and most fall into the latter category). However if you choose your card carefully you should be able find plenty of good options. Interestingly enough, the two best gas cards donít come from banks or gas stations, but rather credit unions. Both the PenFed Visa gas card and the Fort Knox Visa Platinum give 5% without any caps on your rewards. However, if prices at the pump keep heading up, one has to wonder how long PenFed and Fort Knox will be able continue those programs.
This post was written by Mike from CreditCardForum.com.