If you're going to spend $5 a gallon on gas, you may as well get rewarded for it. Here's how.
Gas prices have reached a new record high with the national average price now topping $5 per gallon for the first time. And unfortunately, things are likely to get worse before they get better: prices are projected to continue climbing in the coming months.
Since it's more expensive to fill up your tank with every passing week, it wouldn't be a surprise if you were struggling with the costs of commuting. But the good news is, a new credit card could help defray at least some of this added expense, making it easier to cope with the high cost of gas.
$5 a gallon for gas? AAA reports new high for nationwide average
How can a credit card help you deal with rising gas prices?
As gas prices climb, using the right credit card to pay at the pump will be more important than ever.
That's because some credit cards offer extra bonus points, miles, or cash back if you make purchases at gas stations. By contrast, other cards may offer bonus cash for other types of spending such as for restaurants – but not give you additional rewards if you fill up your vehicle.
ince gas prices are much higher than they have been in the past, the extra bonus rewards could make a big impact. Say, for example, you use around 560 gallons of gas per year, which is a reasonable estimate for how many gallons the average person goes through.
If gas is around $5 a gallon and you use 560 gallons per year, this could mean spending about $2,800 annually at gas stations. If your credit card offers just 1% back on gas purchases, you would end up with about $28 per year in card rewards.
But if your card offers 5% back at gas stations, you could find yourself with total rewards of around $140 – assuming the bonus rewards apply on all gas purchases throughout the year. That's a lot more money that gets put back in your wallet thanks to a change in which card you use.
The real culprit behind gas prices: The driver is refinery capacity, not oil prices
Should you sign up for a gas card?
Now, the example above is just one hypothetical, and you'll need to consider several different issues when deciding whether to get a gas credit card.
First and foremost, you'll need to research card options and see if you could get approved for one that offers bonus rewards for gas. You'll also want to read the fine print, such as whether there is a limit on how much spending is eligible for the bonus. Finding the right gas card will be critical to getting generous-enough rewards that you can offset some of your added gas costs.
Second, you'll want to think about how much gas you actually use. If you rarely drive and you don't use a lot of gas at all, then it may not be worth signing up for a gas card since the extra rewards wouldn't end up doing much for you.
Inflation's ripple effect: High debt a risk for low-income households
Finally, you'll want to compare any rewards your new card will offer to your current card – and compare other expenses such as annual fees as well. If you find that you can do better and get rewarded more with a new card, then there's typically little downside to applying as long as you don't mind an inquiry on your credit record for a few years. The extra rewards will add up quickly with how high gas prices are, and the bonus your card issuer gives helps to at least reduce your spending on fuel a little bit during these unprecedented times.
Offer from the Motley Fool:Check out The Ascent's best credit cards for 2022
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.