What you Need to Know About Gas Rebate Cards

With today's high gas prices, gas-rebate cards are becoming increasingly popular. And chances are, you've been tempted.

By Vera Gibbons

From Kiplinger's Personal Finance magazine, December 2005

1. Looks are deceiving. With today's high gas prices, gas-rebate cards are becoming increasingly popular. And chances are, you've been tempted. Last year, companies sent out about 14 million pieces of direct mail for oil and gas cards, according to Synovate, a market-research firm. Should you sign up? Replies Scott Strumello, who works for a financial-services consulting firm in Westbury, N.Y.: "Not without understanding that there's a difference between what's featured on the outside of the envelope -- frequently an introductory offer -- and what's in the fine print." With Chase's Marathon Platinum MasterCard, for example, you get a generous 10% rebate on all Marathon purchases, but only for the first 60 days that the account is open. Thereafter, the gas rebate drops to 5%. Unless you buy all of your gas from one company, you're better off with a card like Citibank's Dividend Platinum Select, which offers 5% cash back on any brand of gas (plus you get 5% cash back on drugstore and supermarket purchases, and 1% back on other purchases).

2. They hold the cards. Remember: Issuers can change their terms and conditions with little notice. A perfect example is MBNA's AAA credit card. The card was once extremely popular -- you got a 5% rebate on all your gas purchases. Then the issuer realized that consumers were using it only for gas, says Curtis Arnold, president of CardRatings.com, and the plan was scaled back dramatically. "All of a sudden, consumers got a letter in the mail," Arnold says. "Instead of getting that 5% rebate on gas, most customers now get only 2% if all they do is use the card for gasoline." If terms are changed on your card, ask the issuer if it will offer you any enticing alternatives.

3. Not all gas stations qualify for a full rebate. Given the high cost of gasoline, filling up at a wholesale club may sound appealing. Not so fast. If you use your American Express Blue Cash card to pay for gas at a warehouse club, for instance, you'll get a paltry 1.5%. That's assuming you spend $6,500 that year. "Typically, to get the full rebate, which is generally 5%, you have to go to a stand-alone station," explains Arnold -- that is, a place whose primary function is selling gas.

4. Your savings may go up in smoke. Interest rates on unpaid balances of gas-rebate cards can be more than 15%. "Accruing debt and then paying interest to save a few dollars at the pump doesn't make any sense," says Robert Manning, author of Credit Card Nation. If you carry a balance -- as 60% of all cardholders do -- carry it on a low-interest-rate card.

5. Your rebates may be held hostage. Some issuers, such as Citibank and Discover, don't automatically put the money into your account or issue you a check. Instead, you have to request it. Moreover, your rebate may disappear if you don't act quickly. For example, although there is no cap on the amount you can earn with Citi's Shell MasterCard, you must redeem your rebates within 12 months or they expire. With Citi's ExxonMobil MasterCard, you've got just six months.

6. You can buck the system. No gas-rebate card will save you 20 to 30 cents per gallon -- unless you get creative. At www.cardratings.com, one savvy consumer says the Speed-way/SuperAmerica where he buys gas sells a $50 gift card for $48. When he buys or reloads a gift card, he pays with a Citi Dividend Platinum Select credit card, which gives a 5% rebate on gas-station purchases. On $3-a-gallon gas, that's an 8.8% discount, or 26 cents per gallon.

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