I have chosen a gas card as the first step on My Credit Journey. If you missed that post, it is my 6 month journey to build up credit and get accepted for a decent rewards credit card; after being rejected twice. As a recent college graduate with no credit history, I am looking to build up my credit to help get lower interest rates for big purchases that might be around the corner for me (car, house, etc.). I have identified a gas card as a good opportunity to start building credit.
I drive a gas guzzling SUV and spend anywhere between $100-200 a month on gas. My tank is 18 gallons, and I fill it up at least 3 times a month, sometimes 5 times. I’ve been driving this car for 7 years so I have a pretty good feel for its gas consumption. If you need help gauging this, sit down and do the math. Calculate how many miles you drive each day compared to your MPG to figure out your consumption. I get about 225-250 miles to my 18 gallon tank, which is about 12-14 MPG. I drive about 28 miles a day, which equates to 840 miles or 3-4 fill-ups a month. This figure excludes road trips, which are an outlying factor for me. I usually take my girlfriend’s much more gas efficient Corolla for trips. But if long trips are a regular occurrence for you, include them in your calculations. I will be selecting my new gas card based on 2 factors: Price and Rewards.
The most important factor in deciding on a new gas card should be price. You will want to pick a card from a gas station that consistently has low prices. I’ve been planning this for a while and have been auditing the gas prices in my area. When I see a sign I make a mental note of the cheapest price I see when I’m out driving. I’ve been also using a very useful website to do this: Gas Buddy.
Gas Buddy is the best website I’ve discovered that covers gas prices by location. They also have some very interesting maps and a trip calculator. I’ve been looking up gas prices in my area for a couple of weeks and found a gas station that was almost always the lowest. The Chevron, which is coincidentally located a block away from my residence, is always among the lowest. I will also include 2 other competitors that are relatively low as well, BP and Shell. I’ve excluded any gas stations that weren’t relatively close to my daily driving patterns. There is no point to driving to a gas station that is cheaper by a cent or two, if that gas station is 20 miles out of the way. Unfortunately, Costco is the second cheapest but it falls under this category being 23 minutes out of the way.
I’ve taken an average of 5 random days through out the month to calculate each stations price per gallon. The monthly price is based on 3 fill-ups.
|Gas Station||Price per Gallon||Price per Month||Price per Year|
The Chevron is a clear winner in this category by having the lowest price and closest location.
About every gas card advertises rewards for using their card. I will compare the rewards of my price finalists to come up with a true cost figure that includes the value of the rewards. Careful consideration will need to be applied. There will be hidden ceilings, fees, and conditions hidden in the fine print. Don’t let their advertisements fool you, that 10cents a gallon may only be for a limited time. I am excluding any other factor not related to fuel purchases. Some of the cards offer cash back rewards on non-fuel purchases, but I plan on using this card for fuel only. I also plan on paying it off each month, so I am not factoring in APRs, balance transfers, or any of that good stuff.
Chevron offers $.10 per gallon. BP offers 10% back for the first 60 days and 5% after, but it has a cap of $25 per billing cycle which shouldn’t be an issue for ordinary consumers. Shell offers 5% back but a $20 annual fee if you use the card less than 9 times in the calendar year.
|Gas Station||Price w/o Rewards||Rewards Total||New Price per Year|
|BP||$1,678.32||$111.87 first year
$83.90 other years
|$1,566.45 first year
$1,594.42 other years
BP is the clear winner for the first year because of the introductory offer. The chevron edges out by $19.78 on every year thereon after. The Chevron card will be better at lower gas prices, but worse at higher prices because of its flat 10 cents per gallon rate.
The BP card may attract a lot of people for its introductory offer, but its gone after 60 days. Some people may want to go for the BP for the first year and use up its introductory offer and for the fact that it performs better at higher gas prices.
Personally, I am going for the Chevron card. It is more conveniently located and has better long-term return. Of course this is assuming that gas prices remain constant, which we all know do not. An interesting note, that according to GasBuddy the same Chevron had a price of $1.60 per gallon the year before. Excluding the introductory offer, the BP card will perform better if the price per gallon is above $2 while Chevron will perform better when it is below $2 per gallon; assuming equal gas price between the two stations. One thing to keep in mind is that the BP card is provided by Chase which has been really been clamping down on application requirements. I have to choose my applications carefully, as too many credit checks in a short period of time will negatively impact your credit score.
One thing to keep in mind, these figures are completely dependent on my situation. It is dependent on my gas consumption and local prices. In order to make the best decision for your scenario you will need to go through this process with yourself!