If you're carrying a gasoline-branded credit card in your wallet, you may want to throttle back.
Though fuel cards can be a smart option in special cases, in general you'll do better pumping up your rewards with another type of card.
"Gas cards are the dull, boring sedans of the credit-card world," said Matt Schulz, senior analyst with the credit-card comparison site Creditcards.com. For most consumers, they are not a good deal, he said.
In general, gas cards have minimal rewards, paltry sign-up bonuses, extra hoops to jump through, and higher interest rates compared with general-purpose cards, he said.
The typical gas card offers a 10-cent-per-gallon discount, according to a recent Creditcards.com survey, which included proprietary cards used only at certain brands of gas station, as well as co-branded fuel cards with the Visa or MasterCard logos good at gas stations and elsewhere.
At current pump prices, the average 10-cent discount works out to about a 4 percent return. That's not a bad deal compared with typical cashback cards paying from 1 percent to 5 percent on purchases. But gasoline prices are relatively low right now. When pump prices eventually climb, the value of the discounts will fall.
"Getting 10 cents off per gallon when gas is $2.25 is a whole lot better percentage deal than when you're paying $4 a gallon," Schulz noted.
The cards have other problems, he said. Many gas cards come with restrictions - such as minimum purchase requirements before discounts kick in, limits on fuel rewards, or both - that make it hard to pile up significant savings.
For example, six of the 20 fuel cards in the Creditcards.com survey require cardholders to buy at least 45 gallons of gas each month or they miss out on any discounts. Another half-dozen cards set a maximum on the amount of fuel rewards that cardholders can earn, with two cards capping rewards at just $99 a year.
Gas-branded cards also typically charge higher-than-average interest rates on revolving balances. Creditcards.com found an average annual rate of 24 percent among the fuel cards it studied vs. an average 15 percent for general cards.
"If you're the type of person who goes to the same gas station all the time and who drives a lot, it can work out OK, assuming that you pay it off every month," Schulz said. "In reality, there are better options out there."
Despite the drawbacks, gas cards can make sense in a few other special situations, he said. For one thing, they can be a good way to build credit because they are generally easier to qualify for. Just like many department-store cards, gas cards often are approved instantly.
"If you're someone struggling to get credit, it can be a decent option," Schulz said. "Just put a little bit on the card so you can pay it off and don't have to battle the 24 percent APR. It can work out pretty well until your credit improves and you can graduate to a credit card with better terms."
Gas cards also may make sense in the short term for motorists planning long road trips who take advantage of higher introductory discounts that many issuers offer as an enticement to sign up, Schulz said.
"If you apply and get 25 cents off for the first 60 or 90 days, that can be a significant savings. Generally, though, in the long run, gas cards aren't that great a deal for a person with pretty good credit."