Considering a Gas Rewards Card...

[msarro]

Hey everyone!
Here's my situation - I have recently paid off all of my credit cards. All of my accounts have been closed save for one, and that card is literally frozen (in a block of ice, in my freezer).

I have a budget set up, and due to gas prices going up I'm looking to find a way to get something out of the gas money I'm spending. I'm considering applying for a gas rebate card. Note that I do have the money set aside already, so basically as soon as I spend money on gas, I'll go home and pay off the amount on the card.

I'm looking at two options. There's the discovery open roads card, which offers 2% back on all gas purchases on up to the first 250$ a month spent on gas. I have 240$ budgeted, and usually spend around that much.

Then, the other card I found is the Pentagon Federal Credit Union's card. To join the CU I'd have to spend a total of 20$ (5$ to buy a share of the CU, and 15$ to join an eligible organization). THEN I would have the option to apply for the credit card.

I have excellent credit and I don't really have a reason to think that I'd be declined from either except for the fact that I just moved. However, I know in the past that has been enough to get declined.

While the Credit Union card would pay for itself in about 2 months, there's a chance that I could be declined. It also is a visa card, which is accepted at more places than Discover.

With the discover card I think there's slightly less of a chance I'd be declined. And even if I am, I haven't spent any money for the privilege of applying. The downside is its accepted at less places, though I've investigated and all of the places where I usually get gas accept Discover. I can't be sure if I'm traveling. The other downside is that if I spend more than 250$ (like if I travel), I only get 1% back after the first 250$, so I feel like I'd be leaving money on the plate.

I know it seems nitpicky, but I'd appreciate advice. I don't mind spending the 20$ for the Pen Fed (the first 15$ goes to a charity, and the next 5$ is to buy a CU share which I could eventually get back) but I'd hate to spend the cash and get declined.

[Slug]

Go with PenFed. I've been a member for about 5 years now. The card used to be great for many things (1.25% on gas, 2% on groceries, and 5% on gas). It's now 5% on gas and 1% on everything else, but they also occasionally do rotating rewards a la Discover. The reward is great because it requires you to do nothing. Your rewards are simply automatically deducted from your bill. You don't have to sign up or enroll or cash in or anything. There's also no limit on the reward that I know of. Their customer service is outstanding. Additionally, PenFed offers members other good benefits. They have a great car buying process and excellent rate on auto loans as well as some mortgages. Further, they have in the distant past run special CD programs around the holidays where the rates were phenomenal. What I'm trying to say is there are many more benefits than just that card. I got in exactly the way you suggest - pay the fee and open an account with $5 (mine's up to about $5.20 now though). Oh yeah, and did I mention the gas reward is 250% better than Discover? Take the risk. If you have good credit it should not be an issue.

PS I have a Discover card. It's fine. I use it for the 5% cashback categories, and that's it. Beyond that it holds little utility for me.

[msarro]

Originally Posted by Slug

Go with PenFed. I've been a member for about 5 years now. The card used to be great for many things (1.25% on gas, 2% on groceries, and 5% on gas). It's now 5% on gas and 1% on everything else, but they also occasionally do rotating rewards a la Discover. The reward is great because it requires you to do nothing. Your rewards are simply automatically deducted from your bill. You don't have to sign up or enroll or cash in or anything. There's also no limit on the reward that I know of. Their customer service is outstanding. Additionally, PenFed offers members other good benefits. They have a great car buying process and excellent rate on auto loans as well as some mortgages. Further, they have in the distant past run special CD programs around the holidays where the rates were phenomenal. What I'm trying to say is there are many more benefits than just that card. I got in exactly the way you suggest - pay the fee and open an account with $5 (mine's up to about $5.20 now though). Oh yeah, and did I mention the gas reward is 250% better than Discover? Take the risk. If you have good credit it should not be an issue.

PS I have a Discover card. It's fine. I use it for the 5% cashback categories, and that's it. Beyond that it holds little utility for me.

Awesome, thanks for the help!

[feh]

I've had a BP Visa card for years now, and am very happy with the rewards. If you have BP stations in your area, you could get 5% off each gallon.

[Little House]

I think I'd opted for the PenFed credit card as well. The only other possibility would be to select a particular gas card, like BP, 76 or Shell. They offer rewards as well.

[JonesyM]

Just shop at stop and stop (if there in one where you're located) with a stop and shop card. I just got $0.40 off a gallon the other day from getting points grocery shopping.

[msarro]

Originally Posted by Little House

I think I'd opted for the PenFed credit card as well. The only other possibility would be to select a particular gas card, like BP, 76 or Shell. They offer rewards as well.

Sadly most of the "name brand" gas stations here charge, on average, about 10 cents more per gallon. That's what made the Discover and the PenFed cards so attractive. The best deals are at minimart style places (Wawa, Turkey hill, 7 Eleven, Quick Chek - places like that if any of them sound familiar).

Looks like some nice charity will be getting a donation from me... if I get approved the card should pay for itself fairly quick!

As for stop and shop, there's only one nearby, and its pretty far outside of my usual driving pattern. Not close enough to be worth the extra trip out

[Frugal]

I think we will use a Chase card that will give us 5% back on gas beginning approx. in July 2011. This is a way to save even more money on rising gas prices, and honestly is less expensive than using other cards. For about a three month period, you receive 5% back on gas. I don't know all the restrictions, because my spouse uses this card, not me.

[JoshuaHeckathorn]

I agree with Slug- PenFed is probably your best choice.

[disneysteve]

Originally Posted by msarro

Sadly most of the "name brand" gas stations here charge, on average, about 10 cents more per gallon.

That's exactly why I question the rationale of getting a company-specific credit card. What good is saving 5%/gallon if the station you are forced to go to charges 7% more than the station across the street?

[bjl584]

Originally Posted by disneysteve

That's exactly why I question the rationale of getting a company-specific credit card. What good is saving 5%/gallon if the station you are forced to go to charges 7% more than the station across the street?

Are you allowed to pump your own gas in New Jersey? If not, that tends to raise prices a bit.

I have a AAA Visa. I get 2% off any and all gasoline purchases.

[greenskeeper]

Originally Posted by bjl584

Are you allowed to pump your own gas in New Jersey? If not, that tends to raise prices a bit.

I have a AAA Visa. I get 2% off any and all gasoline purchases.

actually you can't pump your own gas in Jersey, but the state has lower prices due to less fuel taxes.

[disneysteve]

Originally Posted by bjl584

Are you allowed to pump your own gas in New Jersey? If not, that tends to raise prices a bit.

Sadly, we can not pump our own. Drives me insane. The only good thing is we have among the lowest gas prices in the country.

What I was referring to, though, was stations practically next to each other with a 20 or 30 cent price difference.

[greenskeeper]

My one credit card is discover. I put just about everything on the card and pay it off in full each month. I get a cashback bonus of 1% on everything, monthly there are 5% cashback categories.

I put the cashback bonus towards the balance on the card, although you can opt for gift cards of greater value if you choose.

YTD discover has paid me $240 to use their card
(and I'm not a big spender, could be more if you are)

[Slug]

Originally Posted by greenskeeper

My one credit card is discover. I put just about everything on the card and pay it off in full each month. I get a cashback bonus of 1% on everything, monthly there are 5% cashback categories.

I believe that Discover's 1% on everything is actually tiered. Per the cardholder agreement, "Up to 1% Cashback Bonus - Automatically earn 1% unlimited Cashback Bonus on purchases after your total annual purchases exceed $3000; purchases that are part of your first $3000 earn .25%. Warehouse purchases (those made at select warehouse clubs, wholesale distributors, discount stores and their affiliates) earn .25%." Thus, you aren't earning 1% until you've spent $3,000 first.

Also, the monthly categories you describe are actually usually quarterly and have a limit to $300 worth of purchases.

Based on these limitations, you should explore the Chase Freedom card which has the same features you describe here without the tiers and with higher purchase limits on the 5% categories.

I still have a Discover card, but its share of my wallet is very low.

[Slug]

Originally Posted by Slug

Go with PenFed. I've been a member for about 5 years now. The card used to be great for many things (1.25% on gas, 2% on groceries, and 5% on gas). It's now 5% on gas and 1% on everything else, but they also occasionally do rotating rewards a la Discover. The reward is great because it requires you to do nothing. Your rewards are simply automatically deducted from your bill. You don't have to sign up or enroll or cash in or anything. There's also no limit on the reward that I know of. Their customer service is outstanding. Additionally, PenFed offers members other good benefits. They have a great car buying process and excellent rate on auto loans as well as some mortgages. Further, they have in the distant past run special CD programs around the holidays where the rates were phenomenal. What I'm trying to say is there are many more benefits than just that card. I got in exactly the way you suggest - pay the fee and open an account with $5 (mine's up to about $5.20 now though). Oh yeah, and did I mention the gas reward is 250% better than Discover? Take the risk. If you have good credit it should not be an issue.

PS I have a Discover card. It's fine. I use it for the 5% cashback categories, and that's it. Beyond that it holds little utility for me.

I wanted to add that PenFed recently changed their foreign transaction fee policy. Now none of their cards charge foreign transaction fees.

Also, I wrote a review of the PenFed card here: Review of PenFed VISA Platinum Gas / Cash Rewards Card | Sunk Costs Are Irrelevant

[bjl584]

Originally Posted by disneysteve

Sadly, we can not pump our own. Drives me insane. The only good thing is we have among the lowest gas prices in the country.

What I was referring to, though, was stations practically next to each other with a 20 or 30 cent price difference.

I don't see much of that around here. Most of them will only vary by a penny or two. But there is one gas station close to the airport that inflates their prices by 20 cents or so. They are playing off the business travelers returning their rental cars.

[disneysteve]

Originally Posted by bjl584

I don't see much of that around here. Most of them will only vary by a penny or two. But there is one gas station close to the airport that inflates their prices by 20 cents or so. They are playing off the business travelers returning their rental cars.

Right near my house is a Shell station directly across a small 2-lane street from a US Gas station. Shell is consistently 25 cents higher per gallon. I realize it is brand name vs. generic but who cares? If US Gas is $3.15 and Shell is $3.40, even with a 5% discount with a Shell card, US Gas is still 8 cents cheaper.

[bjl584]

Originally Posted by disneysteve

Right near my house is a Shell station directly across a small 2-lane street from a US Gas station. Shell is consistently 25 cents higher per gallon. I realize it is brand name vs. generic but who cares? If US Gas is $3.15 and Shell is $3.40, even with a 5% discount with a Shell card, US Gas is still 8 cents cheaper.

True. And most likely, both those gas stations receive their gas from the same refinery, so chemically speaking, they are identical.

[greenskeeper]

Originally Posted by Slug

I believe that Discover's 1% on everything is actually tiered. Per the cardholder agreement, "Up to 1% Cashback Bonus - Automatically earn 1% unlimited Cashback Bonus on purchases after your total annual purchases exceed $3000; purchases that are part of your first $3000 earn .25%. Warehouse purchases (those made at select warehouse clubs, wholesale distributors, discount stores and their affiliates) earn .25%." Thus, you aren't earning 1% until you've spent $3,000 first.

Also, the monthly categories you describe are actually usually quarterly and have a limit to $300 worth of purchases.

Based on these limitations, you should explore the Chase Freedom card which has the same features you describe here without the tiers and with higher purchase limits on the 5% categories.

I still have a Discover card, but its share of my wallet is very low.

however it works, I did the math and my "cashback" return is 2.7% based on how much I have put on the card YTD.