I said it last summer and I'll say it again: You never need one of things. Never.
Last June, I wrote about why you should get rid of your gasoline credit card — because the rewards just aren’t competitive. Since then, the price of gasoline has plummeted, which might seem to help the case for some gas cards. Nevertheless, these cards are still a bad deal…
Low gas prices don’t help gas credit cards
At 10 cents off the price of gas, that equals a 2.5 percent discount off of gas at $4 a gallon, as it was in many places last June when I ran the numbers. But with gas now at around $2 a gallon in many places, that same discount is now equal to 5 percent off per gallon.
But you’re still getting the same absolute savings in dollars that you would have, regardless of the current price of gas. As I detailed last year, that absolute savings works out to be small compared to other reward credit cards, even if you drive a lot.
Creditcards.com recently conducted a survey of the 20 largest major-brand gas cards — and found that their disadvantages are legion. For example, gas cards had an average APR of 24.14 percent, far above the rest of the market, which is around 15 percent.
Low bonuses and confusing rewards
Creditcards.com also found these cards offered sub-standard sign-up bonuses, and their rewards were filled with confusing terms and limitations such as minimum spending thresholds, maximum limits, qualified purchase requirements, and tiered rewards levels. And of course, they reached the same conclusion that I did: Rewards offered aren’t competitive with other reward credit cards.
“Gas cards are the dull, boring sedans of the credit card world,” according to Matt Schulz, CreditCards.com’s senior industry analyst. “They’re stuck in the slow lane, destined never to be flashy.”
The wider lesson
So gas cards stink, and you knew that because you read what I wrote last summer. (You do read everything I write, don’t you?)
So why am I beating on the same drum again? The lesson here is not just that gas cards are bad, but that reward-card owners must manage their portfolio strategically. It’s not enough to just apply for a credit card that offers a discount on what you would have paid. You have to compare the discount to what you would have gotten from a competing credit card, since you can apply for every card you are offered.
This is as true for gas cards as it is for a store card, frequent-flier mile card, or any other reward card. Once you understand that, than you will be in a position to evaluate any reward credit card offer.
Article last modified on March 7, 2017. Published by Debt.com, LLC .