Reward Cards can Save on Gas When you Pay the
Balance in Full
Some of the best reward cards offer rebates on
gasoline and grocery purchases to attract new customers. Their
offer seems to be working. With higher gasoline prices, many
consumers have realized that some reward cards can help them
save a substantial amount of money at the pump.
Here's how they work
When you use a credit card that offers a cash rebate, you can
reduce your gasoline expense by 3 to 10 percent. Marathon and
Hess have a 10% rebate card, if you have these fuel stations in
your local area.
The Citibank Platinum Rewards card seems to be a good option.
It has a permanent 5% cash rebate on all gasoline and grocery
purchases, and a 1% rebate on all other purchases. If the cost
of fuel is $3, then you get an effective cash rebate of fifteen
cents per gallon. The same holds true at the grocery store. It's
almost like getting $5 back for every $100 you spend. Citibank's
card has a $300 annual limit on rebates. This translates to a
limit of $500 in eligible gasoline and grocery purchases per
month.
As with any reward, you only benefit if you avoid finance
charges by paying the balance in full each month. Also, there is
a chance that you may become overextended if you get in the
habit of charging basic living expenses. Credit card companies
know this, which explains why they are willing to offer such
great terms on these accounts. Still, if you can manage the
accounts properly, you stand to save a considerable amount of
money.
Most participating card issuers will allow you to request a
check once your rewards balance exceeds $50. Most limit rebates
to $300 to $500 a year.
Rewards not limited to cash rebates
Other reward cards are also on the market. Some offer gift
certificates as a reward for use. These tend to be less
attractive since there are limits on where you can use these.
Also, they typically encourage you to spend more at those
stores.
Some reward cards offer points that can be redeemed for
reward items. Points tend to be the least attractive reward,
since they are worth very little. Similarly, airline miles tend
to be one of the least valuable type of reward, often with
$35,000 or more in purchases required to get a single round trip
ticket. A better option is the Southwest Airlines Visa, which
allows you to combine credits for purchases with your flight
credits. If you fly at least 3 times a year and spend at least
$500 a month on purchases, this could be a better option for
many people.
Rewards are not worth finance charges
Whatever option you choose, make sure that you pay off the
balance in full each month. If you are concerned about charging
more than you can pay off, try one of two strategies. You can
send in extra money each month when you know that you have made
charges since the statement closing date. Also, consider
limiting your charges in the beginning so that you are
comfortable with the amount that you are charging. Paying off
the balance in full every month will build your credit, allow
you to benefit from rewards and help you avoid falling victim to
heavy credit card debt.
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