Evaluating the Benefits and Drawbacks of Gas Rewards Credit Cards
Are gas credit cards the best option for improving your credit score? Here are some things to think about before applying.
**Pros of Gas Credit Cards**
**Accessibility**: Gas credit cards are easier to get than traditional credit cards, especially if you have poor or no credit history. While standard credit cards often require a good credit score, gas card providers might approve you even with less-than-perfect credit. This can help you rebuild your credit. However, you still need to go through the application process, and approval isn’t guaranteed. Some gas cards have stricter credit requirements than others, but your chances are generally better with a gas card than with other types of credit cards.
**Rewards and Rebates**: Depending on the gas credit card, you can earn cash-back rebates on every dollar spent at the pump. This is particularly useful if you frequently fuel up at the same gas station or have a preferred fuel brand. Some cards require a minimum monthly gas purchase to qualify for the rebate, so choose a card from a company with multiple stations in your area. Rewards-based fuel cards might offer money back for each dollar spent or a lump sum at the end of the year based on your annual spending. These rewards can be used for gift cards, travel, hotels, merchandise, or to lower your account balance. However, rewards can change without notice, and some cardholders have reported limited options. Don’t let rewards be the sole factor in your decision, as they might be offset by higher interest rates or annual fees.
**Pre-Qualification**: Applying for a credit card and being rejected can negatively impact your credit score. Some credit card companies offer a pre-qualification process where you answer a few questions to see if you might qualify before applying. This can help you avoid a hard inquiry on your credit report, which can lower your score. Look for gas cards that offer this pre-qualification process to increase your chances of approval.
**Convenience**: If you have a debit card, you likely already enjoy the convenience of paying at the pump. Many gas companies now allow payments through digital wallets or mobile apps, so you don’t need to carry your physical card as long as you have your smartphone.
**Cons of Gas Credit Cards**
**Higher Interest Rates**: Gas cards often come with high-interest rates, typically ranging from 21% to 28% APR. If you have bad credit, you might have to accept a higher rate than you can afford. The best way to build your credit and avoid paying interest is to pay off your balance each month instead of letting it accrue.