Research: Gas Rewards Have Steadily Devalued
When we investigated the rebates in regular cash back credit cards, we found the same phenomenon. We have seen a steady decline in the rebates paid for gasoline spending. At it's peak, a good cash back card would pay 5% rebates on gasoline spending. The average percentage paid now is about 2%.
Methodology - To study trend of gas rewards, we looked at the reward programs from all the major has companies. The reward programs that we looked at included Shell, BP, Marathon, Phillips Conocco, Sunocco, Lukoil, Gulf, Arco, Chevron Texaco, ExxonMobil, Speedway SuperAmerica and Citgo. For credit card issuers that offered cash rebates on gas spending, we looked at cards issued by Citibank, Chase, Bank of America, American Express, Discover and PenFed. Since we have been reviewing credit cards since 2004, we have records of the rebate formulas dating back years.
We then took notes of all the cash back formula and changes they have been through. In some cases, the exact dates cannot be pinpointed because gas companies and issuers typically do not send out press release about changes they make to their rewards when it is actually a devaluation.
The table below shows the results of our study.
| Old Formula | New Formula | |
| Shell MasterCard | 5% |
$500-$999.99 - 10 cents $1,000-$2,499.99 - 15 cents more than $2,500 - 20 cents |
| Sunoco MasterCard |
3 pts/gallon - first 2 fills a month 10 pts/gallon - 3rd fill onwards |
3 pts/gallon - first 2 fills a month 10 pts/gallon - 3rd fill onwards |
| 4% on gasoline at Citgo | $0.05/gallon | |
| Exxon Mobil | 4% on gasoline at Exxon Mobil | $0.15/gallon (Citi will discontinue this card in October and cardholders will be issued the new store card at $0.06/gallon |
| Philips Conoco | 4% on gasoline | $0.05/gallon (Citi has discontinued this card) |
| Hess | 5% | 3% |
| Marathon | 5% |
less than $500 - $0.05/gallon $500-$999 - $0.15/gallon More than $1,000 - $0.25/gallon |
| Speedway SuperAmerica | 5% | 40 pts/$1 - changed to reward system |
| Gulf | 3% | |
| Chevron Texaco | N.A. |
More than $300 - $0.10 More Than $1,000 - $0.20 |
| Lukoil | 4% | Discontinued |
| BP Amaco | 5% | $0.15% |
From the table above, it is clear that when most gas credit cards were launched originally, they let you earned a fixed percentage for every dollar that you spent on gas at their stations. The highest percentage was 5% (though introductory offers were known to go as high as 10%). The lowest rebate percentage was 3%.
When the financial crisis hit in 2008, the Federal Reserve embarked on a near zero percent interest rate policy and the result was a rise in commodity prices. Gasoline prices were frequently at $4.00 during certain periods. It was during this time that gas companies changed the reward system on their credit cards from a fixed percentage of dollar spent on gasoline to savings per gallon. In fact, the only company that held on to the percentage formula is Gulf, Hess and BP. Gulf has kept their rebate the same for their credit card at 3%. Hess has reduced theirs from 5% to 3% and BP has devalued their reward program the most (from 5% to 0.15% - more than a 90% devaluation).
This change had one implication. It meant that as gas prices rose, consumers got less (in percentage terms) rebate (or cash back) versus the old formula. Consumers only gained (or were better off) if gasoline prices fall.
More recently, gas companies have been adding tiers to their reward system. It used to be that after the first major changes, you could earn 10 cents or 15 cents rebate per gallon. Now, some have added spending requirements. Shell, for example, requires you to spend more than $2,500 a month on their gasoline to earn 25 cents per gallon in cash back. Based on current gas prices for regular gas, this is quite a nice rebate percentage. But Chevron, for example, only allows you to earn 10 cents per gallon if you spend at least $300 on their gasoline. Spend any less and you get nothing.
The results from cash back credit cards from mainstream issuers weren't that much different in that consumers are now getting less cash back on gasoline. The Citi Dividend Platinum Select Card used to pay 5% cash back on gasoline. But today, their cash back formula has changed and they now have a 5% quarterly rotating category system where you might get gasoline as a spending category in one quarter. The Chase Freedom used to pay 5% cash back on gasoline as well. But like Citi, they have become a rotating category cash back card as well.
The old American Express Blue Cash paid 5% cash back on gasoline after $6,500 in annual spending. But the new Blue Cash Everyday pays 2% cash back only. Discover OpenRoad used to pay 5% cash back on gas as well. It now only pays 2%.
Conclusion - Over the last few years (since 2008), we have seen a devaluation in the reward programs of gas station co-branded cards and also of regular cash back credit cards. Consumers are saving less with their credit cards on gasoline purchases than they used to in the past. Based on the new spending tiers imposed by a couple of gas companies, this trend is unlikely to change any time soon.
Despite this, co-branded gas credit cards are still a good way to save money at the gas station.