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NerdWallet Study: Want to Save Money at the Pump? Don’t Ask Your Gas Card for Help.

by on March 12, 2012

Conventional wisdom has it that if you want to save money at the pump, you swear your loyalty to one station, and in return you get a better discount than if you’d just gotten a generic gas card. But this is one of those times when conventional wisdom is incorrect: based on a NerdWallet analysis of 5 major gas credit cards and 10 no annual fee, generic gas cards, the generic ones can beat station-branded cards even at their own stations.

But if station-branded rewards rates are so low, why do people still get – and recommend – those cards? The problem is how the rewards are presented: as cents-per-gallon discounts rather than percentage terms. Offering 5 or 10 cents off per gallon sounds appealing, especially if the discount will bring the price down below the $4 mark. But let’s put those discounts in dollar terms. If gas is $3.79 a gallon (the nationwide average as of March 7th), even a 10-cent discount works out to just 2.6% rewards.

And if you aren’t willing to jump through hoops – drain your tank to near-empty, say, or buy far more gas than anyone needs – you’ll see your rewards rate plummet on some of these branded cards.

For a comparison of over 45 gas cards with greater than 1% rewards at the pump, see our newly released Spring 2012 roundup of the best gas cards.

The findings: go broad or go home

We’ll let the numbers speak for themselves. We compared credit cards from Gulf, ExxonMobil, Chevron/Texaco, BP and Shell to 10 generic gas credit cards. To ensure an apples-to-apples comparison, we included only cards with no annual fee.

Station-Branded Generic
Number of Cards Included 5 10
Gas Rewards Rate 2.55% (-14%) 2.95%
Has Signup Bonus 1 8
Signup Bonus Value $75* $50-$250

*Assumes $1,000 spent monthly and a 20-gallon tank. Smaller tanks will have a smaller bonus.

And the benefits of non-branded cards don’t stop there. All but two of the generic cards offered rewards in other categories; for example, they gave an average of 2.2% rewards on groceries. The ones that didn’t give bonus categories made up for it with an unlimited 5% back on gas.

How many non-station bonus categories did the branded cards have between them? Zero.

Results

Card Name Base Rewards Rate Gas Rewards Rate Signup Bonus Value
PenFed Credit Union Platinum Rewards 1.00% 5.00% $250
PenFed Credit Union Platinum Cashback 0.25% 5.00% $0
ExxonMobil Platinum MasterCard 1.29% 3.96% $0
Gulf Credit Card 1.00% 3.00% $0
BankAmericard Cash Rewards 1.00% 3.00% $50
Chase Freedom 1.00% 3.00% $100
American Express Hilton (No Fee) 1.50% 3.00% $200
Chevron and Texaco Credit Card 1.00% 2.69% $0
BP Credit Card 0.75% 2.25% $100
Amazon Credit Card 1.00% 2.00% $30
American Express Blue Cash Everyday 1.00% 2.00% $100
Union Bank American Express 1.00% 2.00% $50
Citi Hilton HHonors 2.00% 1.50% $200
Shell Credit Card 0.75% 0.75% $0

We assume $1,000 of monthly spending, 50 gallons purchased a month and a 15-gallon tank. Increasing monthly spending lowers the Exxon card’s base rate; buying more gas raises the Shell card’s rate; and having a bigger gas tank raises the BP card’s rate.

The standouts

The PenFed cards give an unlimited 5% cash back on all gas, anywhere. The best possible branded card, ExxonMobil, brushes up against 4%, and it’s all downhill from there.

The Chase Freedom, Hilton card and others give the same or better rewards than 4 of the 5 gas cards. In addition, they give rewards on bonus categories like travel, groceries, airfare and shopping. The other cards? Not so much.

In general, you’re better off with a non-branded card that gives you gas rewards anywhere you fill up, pays out in other categories, gives you a signup bonus and doesn’t try to nickel and dime you when it comes to redemption. Note that we excluded from our study the non-networked cards that can only be used at the gas station itself, such as the Valero Credit Card or Shell Drive for Five.

The danger of discounts

All but one of the gas cards we studied offered at least some of their rebates in the form of cents-per-gallon discounts. The appeal of a 5, 10 or 15-cent discount is clear: it’s immediate and visceral, but it unfortunately masks the dollar value of the discount. 10 cents off sounds like a lot, but with gas at $3.79 a gallon, that’s less than 3% back. And as the price of gas rises, the value of a cents-per-gallon discount falls.

What’s more, discounts leave you vulnerable to fine-print blindsides. For example:

BP limits your fuel credits to one fill-up, dramatically reducing the rewards rate for compact car drivers.

Shell doesn’t pay out rewards at all if you don’t spend $500 a month.

ExxonMobil’s advertised “up to 2% back” on all spending up to $10,000 annually doesn’t mean what you think it does. It actually averages out to 1.35% when you spend $10k a year, and less as you spend more. Spend $6,000, and that drops to 0.9%.

As the price of gas rises, the value of a 10-cent discount falls.

To illustrate just how fluid station cards’ rewards are, here are BP, Shell and ExxonMobil’s rewards rates under different scenarios:

BP

BP gives a 15-cent per gallon discount for every $100 spent at BP, 5 cents per gallon for every $100 spent elsewhere, and 25 cents for every $100 spent anywhere during the 60-day promotional period.

But it limits you to redeeming your fuel credits at one fill-up, capping you at 20 gallons, so if you have a small tank, you’re out of luck:

Base Rewards Rate Gas Rewards Rate Promo Period Rate
20-gallon tank or larger 1.00% 3.00% 5.00%
15-gallon tank 0.75% 2.25% 3.75%
10-gallon tank 0.50% 1.50% 2.50%

Shell

Shell will give you rebates on the first 100 gallons you buy based on your spending the previous month:

Spend <$500 $500-$1,000 $1,000-$2,500 $2,500+
Rebate 0 10c/gal 15c/gal 20c/gal

We’ll assume that you use the full 100 gallons. Here’s your rewards rate based on spending per month:

Spending $500.00 $1,000.00 $1,500.00 $2,000 $2,500
Rewards Rate (base and gas) 2.00% 1.50% 1.00% 0.75% 0.80%

ExxonMobil

ExxonMobil’s gas rewards rate is a flat 15 cents off per gallon, or 3.96% rewards. But its base rewards rate is tiered, based on your annual spending; 0.25% on the first $1,000, 1% on the next $5,000, 2% on the next $4,000 and 1% thereafter. Here’s how your rewards rate changes based on your monthly spending:

Monthly Spending Base Rate Gas Rate
$500 0.92% 3.96%
$1,000 1.29% 3.96%
$1,500 1.19% 3.96%
$2,000 1.14% 3.96%

More than anything else, it’s complications like these that sour us on branded gas cards.

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