Gasoline Rebate Cards Worth Another Look

from Laura A. Bruce

Credit cards that give you a rebate on gas purchases may be worth another look.

If you're going to spend more on gasoline anyway -- and don't carry a balance -- gas company rebate cards can kick back a few extra gallons for your thirsty tank.

Almost all the major gas companies have teamed up with credit card giants such as Visa or MasterCard to offer rebates of 1 percent to 5 percent on gas and other purchases at the gas station. The pitfalls: the annual percentage rate and the annual fee charged for the card.

Alex Daskaloff, author of Credit Card Debt: Reduce Your Financial Burden in Three Easy Steps, says gas cards, which are really meant for people who frequently use the same gas company, tend to have higher than average interest rates and aren't the best for people who carry a revolving balance.

"For example, Shell MasterCard offers a 5 percent rebate on Shell related purchases and a 1 percent rebate on general purchases," he says. "With increased gas costs, those who buy Shell gasoline with the Shell MasterCard will earn considerably more rewards, while those who use the Shell MasterCard for general purchases won't be able to redeem as much free gas. That 1 percent rebate becomes less rewarding as gas prices increase."

David Smith of First Annapolis, a Linthicum, Md.-based consulting firm that specializes in financial services, says consumers have to evaluate each card.

"What are your alternatives? You may be better off using a low-rate card even after a rebate. But if your transactions don't involve revolving credit, take the rebate," he advises.

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This article was provided by Laura A. Bruce, BankRate.com Staff Writer.