What credit card SHOULD you use to pay for gas?

Introduction

I had written a post a while back about how crazy it is drive 10 minutes to save $.10 on gas.  Now that I’ve come to that realization, I don’t do that anymore.  I don’t know if this is nationwide or not, but about a year or so ago here in Washington state, gas stations have decided to charge an extra $.10 per gallon if you use a credit card (see picture.)  So I’ve been going back and forth trying to decide which credit card is best, so let’s go through our options together.

 

Pay Cash – pay $28.40 for 10 gallons

I think everyone reading this just cringed since we all hate to use cash.  However, we need this here to set our baseline.  So let’s assume we needed 10 gallons of gas, and this paying cash would cost us $28.40.  Easy enough.

 

Pay using a 1% debit card – pay $28.12 for 10 gallons.

I probably should have done my research first, but let’s say you used your Paypal debit card and it counts as a signature transaction and earns 1%, that means you’d pay $2.84 x 10 = $28.40 * 99% = $28.12.  Hey, better than cash.

 

Chase Ink (2X UR on fuel) – $28.50 for 10 gallons (if you value UR at 1.5c)

For the longest time, people have been saying to use the Chase Ink card since you get 2X UR on gas.  So let’s say you pump 10 gallons at the Chevron above at $2.94 per gallon; you would have charged $29.40 and earned roughly 60 UR points.  Well if you value a UR at 1.5c, that means 60 UR = $.90.   This means you paid $29.40 – $.90 = $28.50.  Thus, this option is nearly identical to cash.  The easy math on this is this – if you are paying $.10 more, then divide $.10 by [gas price], so in this example $.10 / $2.94 = 3.4%.  Since you earn 2 X with Ink and UR is valued at 1.5%, then you ‘earn’ 3%.  Well, you paying 3.4% is less than you earning 3% then this is no bueno.  However, if you value UR at 2% and now you earn 4%, then paying 3.4% to earn 4% is worth it to you.  So it’s your call.  For me, I have too many United miles and I value Hyatt at around 1.6c, so this is no good for me.

 

Buy Shell gift card at Office Depot with Ink 5X – $27.19 for 10 gallons

At the Shell stations here in Washington, they treat their gift cards as the ‘credit card price’ instead of the ‘cash price.’  This sucks, but it is what it is.  Anyway, if we buy a Shell gift card at OD with Ink 5X and then use it on the credit card price, we’d have to pay $29.40 but we got back 5X UR = 147 UR * 1.5c valuation = $2.21.  That means we’d pay $29.40 – $2.21 = $27.19.  So this is better than paying directly at the pump and only getting 2X on Ink.

 

Paypay Business Debit Card funded with Paypal My Cash – $26.93 for 10 gallons

Let’s say you were able to buy PPMC at a drugstore with a 5% card and that you’re not afraid of a Paypal shutdown.  Then you use said PPBDC as a debit card to get the $2.84 price.  In this scenario, you would have paid $28.40 * 95.79% ($3.95 fee out of $500) = $27.20 * 99% (PP 1% signtature xaction) = $26.93.  This results in a net savings of 5.2% over the cash cost.  So far, so good.

 

Buy Shell gift card at grocery with 5% plus 4X Fuel Rewards – 

This assumes you have that same 5% card as the example above and you wait for the 4X fuel rewards at say Kroger.  Let’s first decide on what a fuel reward is worth.  At Kroger, you’d need to buy $250 in gift card to earn 1000 fuel rewards to get you $1 off gas up to 35 gallons.  Since we only have a 10 gallon car, we would be only saving $1 x 10 = $10 on a spend of $250 = 4%.  Thus, every fuel reward is worth about 1%.  However, if you have a 15 gallon car (or pumping excess gas into portable tanks), you’d save $15 / $250 = 6%, which means every fuel reward is then worth 1.5%.

 

Update – Sorry this post went out before I could finish it.  Ultimately, your best option is to buy an Ebay GC at a grocery storey with a 5% card and get 4X fuel rewards.  Then use those Ebay GC’s to buy a discounted gas card on Ebay (usually discounted at least 5%) and earn portal points as well as Ebay Bucks.  Preferable Chevron since those GCs get charged the CASH PRICE.  This should save you close to 15% on gas (at least at Chevron.)