ith the covid pandemic-led curbs easing across the country, many workers have returned to offices. This has increased the use of personal vehicles to commute, and brought with it recurring expenses on fuel. Fuel credit cards are a convenient option available to meet this expense. But can these cards help you beat the rising prices of fuel?
Most credit card issuers provide different categories of cards offering higher rewards on specific transactions based on the target consumer group’s spending habits. Fuel credit cards are aimed at those incurring huge expenses on fuel.
Sahil Arora, senior director, Paisabazaar.com, said, “Fuel credit cards offer fuel surcharge waiver, and higher cashbacks and reward points on fuel spends. However, as fuel cards are usually co-branded credit cards, the higher cashbacks and reward points are credited only on incurring fuel spends at select outlets of partner fuel brands.”
Hence, you must keep in mind a few factors before applying for a fuel credit card.
Spending preferences: The accumulated reward points on fuel cards can usually be redeemed against fuel spends made at partner outlets. But some card issuers also allow accumulated reward points to be redeemed at select online partners, or as gift vouchers.
Arora said, “You must factor in the list of partner oil pumps where you can earn and redeem your fuel reward points before zeroing in on any fuel card. Opt for one whose reward points programme and reward points redemption option match your spending habits the most.”
Adhil Shetty, chief executive officer, BankBazaar.com added, “Since a co-branded card is unlikely to offer loyalty rewards on purchases made at non-partnering refill stations, users must ensure the partnering outlet is the one where they refill the most.”
Annual/renewal and joining fee: Opt for the credit card whose welcome benefits, renewal benefits, discounts, cashbacks, reward points, vouchers and other card benefits exceed its joining/annual fees by a wide margin.
Shetty said, “At times, these credit card variants also offer predefined spending targets that could be met to waive membership charges. As such, you should also check whether you can meet those targets to save on annual fees and ensure your card benefits come free of cost, provided you clear your dues in full on time.”
Finance charges: Failure to repay credit card bills in full by the due date can incur finance charges, broadly ranging between 23% and 49% per year, depending on the card and its issuer. While it is always practical to pay your credit card bills in full by the due date, it is still crucial to check and compare the applicable finance charges on fuel credit cards as there is always a possibility of incurring these charges due to a financial exigency or sheer negligence.
Reward points expiry: The reward points of most fuel credit cards expire in two-three years from their date of credit. However, some credit card issuers offer cards without expiry on reward points. “Ensure to read the terms and conditions regarding the redemption, accumulation and expiry of reward points before zeroing in on a fuel card,” said Arora.
Joining bonus and welcome benefits: Another vital parameter to factor in is to compare the joining bonus and welcome benefits offered by various fuel card issuers.
Shetty said, “You should try to understand the actual value proposition of using such a credit card according to your requirements and budget while considering the applicable riders. You should also keep in mind riders like reward points and cashback caps.”
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