The credit card you have in your wallet to save on gas may hurt you when you’re not at the pump.
Gas station-branded credit cards charge an average interest rate of 24 percent, according to a new survey from CreditCards.com. That is miles above the 15 percent average levied by all credit cards, and higher than the 23 percent average charged on retailer cards.
The rewards from gas cards are running on empty, too. The typical gas card offers a 10-cent discount per gallon, which works out to a 4 percent return based on current prices. Not a bad perk right now, but once gas prices rise, the savings drop.
While other card issuers offer sign-up bonuses as much as $100 for high-quality borrowers, gas cards throw out a couple extra pennies per gallon for the first few months to welcome new customers.
“People with good credit can find better deals elsewhere,” said Matt Schulz, CreditCards.com’s senior analyst, who recommends regular credit cards that offer cash back on gas.
Gas cards can still be worth it for people who drive a lot, though, or who need to build a good credit record—as long as they pay off their cards each month.
“They can be great starter cards,” said Scott Bilker, founder of DebtSmart.com. Bilker, a dedicated seeker of credit-card deals who has more than 40 active cards, said his first card was a gas card that he opened in the 1980s. Paying off the balance of that card in full each month allowed him to build enough credit to qualify for lower-rate cards.