Justin Sullivan/Getty Images
Are you considering getting a credit card from your favorite gas station? It’s probably not worth it, according to a new report.
The average interest rate on a gas-station branded credit card is 23.61%, nearly seven percentage points higher than the national average for all credit cards, according to a new analysis from the credit-card website CreditCards.com.
High interest rates can contribute to never-ending debts for consumers who can’t pay their bills.
But even if you pay your entire credit-card bill on time and never have to pay interest, a gas-branded credit card may not be a good deal, the analysis said.
Some of the gas station cards offer discounts at the pump, but the average price break is just 5 cents per gallon. The national average price for a gallon of regular gas is now $2.66, according to AAA, meaning those cards give less than a 2% return.
There are general-purpose credit cards that give rewards of 2% or even more, CreditCards.com pointed out.
Some of those cards include the Capital One Venture Rewards COF, -0.77% card — which also gives new cardholders a bonus worth $500 in travel if they spend $3,000 within three months of opening their account — and Citi’s Double Cash Card, C, -0.68% which does not come with a bonus. American Express’s Blue Cash Everyday AXP, -1.02% card also gives 2% back on gas, with a $200 sign-up bonus.
Nearly one-fifth of consumers have let their credit-card rewards expire, according to a study from TD Bank. That’s another reason a general rewards card can be more helpful — the more ways consumers have to redeem rewards, the more likely they are to do it, Matt Schulz, the senior industry analyst at CreditCards.com, previously told MarketWatch.
Some 12 of the 28 gas cards that CreditCards.com analyzed come with an introductory offer that gives more than the typical discount per gallon. But those are often offered for a limited time.
Because of that, it could make sense to sign up for a gas card before a big road trip, Schulz said. But outside of that scenario, a gas card may not make sense.
“You’d probably still be better off with a general cash-back card,” he said.