If you’re on the lookout for new credit cards that will help to incentivize you for spending as you already do, you have probably at least considered the benefits of obtaining an account that rewards you more significantly for buying gasoline.
This type of credit card is becoming a rather common offering from major lenders because they hope to draw in new borrowers by giving them cash back for purchases they need to make anyway. Some might reward buying gas with an extra percentage point or two of cash back bonuses, and others might grant users the added benefits for buying groceries.
But what should you consider when getting gas credit cards?
The most important thing to think about in these cases is what your current spending and credit card habits look like. For example, do you use your credit card for everything or just gas purchases? If it’s just gas purchases, then this type of card may be ideal for you because it is essentially reducing the price of the fuel you buy. But if you buy other products with the card, the value might be diminished somewhat and therefore you might be better off obtaining a more general rewards card.
Along the same lines, you will probably want to look into whether the account you’re interested in comes with an annual fee. That’s because, based on your spending habits, you might not earn enough in cash back rewards to even cover the cost of what you’re paying for this yearly account maintenance charge, meaning that you’re essentially paying your lender just to have the card.
In addition, you should also think about how you repay your debt in general. If you tend to carry some amount of your balance from one month to the next, it might make the card less of a good deal. That’s because the interest rates on rewards cards are generally higher than those for no-frills credit card accounts, and therefore even if you’re getting 3 percent cash back on every gas purchase you make and paying an extra 4 percent in interest on your balance, you might find the card isn’t worth it.
And of course, whenever you open a credit card account of any type, you should look at how it may affect all aspects of your finances.
Image: Rich Moffitt, via Flickr.com