Budget Basics

April 30, 2006

By MC Nelly Torres
South Florida Sun-Sentinel

Greg McBride, a senior analyst with North Palm Beach County-based Bankrate.com, said the credit card industry is competing for different segments of the population, but especially the 40 percent of consumers who pay their balances off every month.

"These consumers take a card and use it a lot," McBride said "and this became a way for banks to earn money without any risk."

McBride said he expects interest in gas-rebate cards will continue to rise if gas prices increase further.

Customers who use credit cards to buy gas are a large percentage of the market, with credit card transactions accounting for 58 percent of all transactions at the pump, said Jeff Lenard, a spokesman for the National Association of Convenience Stores, which represents gasoline retailers.

Overall, there seems to be a gas-card program designed for every lifestyle.

Discovery Platinum Gas Card promises a 5 percent cash-back bonus on gas and auto parts purchases, in addition to 1 percent in cash-back bonuses on all other purchases. If you are late making a payment, the percentage rate could rise to between 15.9 percent and 28.9 percent.

Chase PerfectCard Mastercard offers a 6 percent rebate on all gas purchases at any station for the first 90 days after the customer signs up for the card -- then it drops to 3 percent. The maximum rebate you can earn for gas purchases on a monthly statement is $15. But to achieve the maximum in rebates on gas purchases, you will need to spend up to $500 monthly at any gas station.

The Chevron/Texaco credit card program allows customers to earn 10 cents per gallon on their first 500 gallons purchased, but the offer is good only for the first five billing cycles. There's another limitation: Cardholders can use the card only at branded Chevron retail stores and participating local Texaco stations.

At Marathon gas stations, consumers can earn a 10 percent rebate if they use the Marathon Platinum Mastercard for the first 60 days after opening the account. But the rebate drops to 5 percent afterward, and the card can be used only at Marathon gas stations.

Giselle Muvdi, who was buying gas at a Shell station in Miramar on Friday before starting her job as a real estate agent, said she uses her American Express card to buy gas because it allows her to earn points that she later uses to buy other products.

"It helps me keep track of how much money I'm spending on gas," said Muvdi, 27. "So I can write it [the gas expense] off at the end of the year."

Consumer advocates said people like Muvdi can benefit from reward cards and gas-rebate cards, but should read the fine print and understand the terms and limits before joining a rewards program.

Consumers should shop around, compare offers and take their buying habits into account before making a choice, said Arnold, of CardRatings.com.

"Don't select a particular gas-rebate card if you are not loyal to that particular brand of oil," Arnold said.

And the golden rule for credit cards also applies to rebate cards: The best way to save money is to pay the balance off every month. Buying gas with any of these reward cards will be an expensive transaction if you carry the balance month to month.

"You need to pay the balance in full every month or the interest rate will catch up with you," McBride said.