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Best Way To Buy Gas – Gas Credit Cards or Discount Stations?

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Figuring out how you can score the cheapest gas can get complicated. To determine the optimal pairing of gas credit card and gas station, there are many things to consider. Some gas stations are cheaper than others, some gas credit cards don’t work at warehouse stores (like Sam’s Club or Costco), and some discount gas stations only take cash. On top of that, there are a whole host of gas credit cards with their own bonus amounts and limitations.

The real question is: What combination of gas credit card and gas station makes for the cheapest gas?

For purposes of this analysis, we took a snapshot of some gas stations in San Jose, California on Dec 8, 2010. However, the purpose of this exercise is to show you how to think about finding the best gas deal, not to point you in the direction of any particular combination of gas stations and gas credit card.  Run this same analysis in your own neighborhood and start putting that saved gas money to better use.

Gas Station Regular Unleaded, 12/8/2010 Price With 5% Rebate
(the Blue Cash Everyday® Card from American Express or the PenFed Platinum Cash Rewards Visa® Card )
Price With 3% Rebate
(the TrueEarnings® Card from Costco and American Express)
Best Possible Price
Arco $3.19 N/A N/A $3.19
Costco $3.15 N/A $3.06 $3.06
76 $3.25 $3.09 $3.15 $3.09
Chevron $3.24 $3.08 $3.14 $3.08

On average, the most affordable gas stations in San Jose cost somewhere around $3.19 per gallon when we checked. The cheapest gas stations were $3.15 and the most expensive went as high as $3.39.

To find the best deal for gas, we compared four reasonably priced gas stations (Costco, Arco, 76 and Chevron) on price, and we included stations with both cash only and credit card options. Our average $3.19 finding applies whether you pay with gas, debit or credit cards, and we wanted to determine whether using a gas credit card would give you a better deal than using cash.

What we found is that most gas cards like the TrueEarnings® Card from Costco and American Express, the Blue Cash Everyday® Card from American Express , or the PenFed Platinum Cash Rewards Visa® Card give between 3-5% back in rebate. That’s something you won’t get paying with cash or your debit card, and it makes a big difference.

What’s the Best Deal?

In this study, we look at (i) ARCO discount gas stations that do not accept credit cards, (ii) gas stations at warehouse stores like Costco that do not qualify for bonuses on most gas credit cards, and (iii) normal gas stations like 76 and Chevron where you can get gas rebates with any gas credit card.

These three types of gas stations require different types of analysis. You have to compare the cash price of Arco against the Amex rebate-adjusted price at Costco, and against the 5% rebate-adjusted prices at 76 and Chevron. In this particular analysis, Costco comes out on top. The combination of Costco’s cheaper gas plus the 3% rebate from the TrueEarnings® Card from Costco and American Express beats out the other options.

In general, we think the findings of our study hold across most of America. You’ll spend the least amount if you can find a Costco nearby and fill up using a 3% rebate the TrueEarnings® Card from Costco and American Express. But whether or not that’s worth the annual cost of a Costco membership and signing up for their credit card, depends on your particular situation. In the case of San Jose, you’re almost as well off just sticking with the expensive gas stations and using a 5% rebate card.

We recommend that you run a similar analysis for your neighborhood and let us know what you find in the comments. You can easily find your neighborhood gas prices with, and you can find a selection of bonus rebates on our gas credit card page.

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