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Friday, October 24, 2014         

ON THE MONEY


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Credit cards can help consumers save on gas

By Candice Choi

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If you're looking to get more mileage from your fill-ups at the gas station, a rewards credit card could be the answer.

With fuel costs eating into household budgets, card issuers are touting the accelerated rewards they offer at the pump. Be aware that these cards can come with a tangle of restrictions that limit how much you actually save.

"As consumers you have to know what the ground rules are before you start to play the game," notes Bill Hardekopf, CEO of LowCards.com. That means understanding what all that fine print in your card agreement actually means.

There are two main ways you can go if you want a card that defrays gas costs. General rewards cards often let consumers earn accelerated rewards on select categories, such as groceries, restaurants or travel. Few cards offer accelerated rewards for gas, but among those that do, the average rate is just under 3 percent, according to CardHub.com.

If you're loyal to a particular brand of gas, companies such as BP, ExxonMobil and Shell also issue their own cards. These cards offer richer rewards on gas but can come with considerable restrictions. The rewards for other spending categories tend to be more limited, too.

Whichever option you choose, here's what to watch for:

EARNING REWARDS

The prospect of earning accelerated rewards for fuel is a powerful selling point. Just be sure that you're actually racking up those promised riches once your card is in hand.

With the Chase Freedom card, for example, cardholders can earn 5 percent back on select spending categories each quarter. For July to September the categories are gas, hotels and airlines. But you must sign up for the higher rewards each quarter. If it slips your mind, you can still get the points retroactively as long as you enroll by the end of the quarter. Customers are also sent reminders, notes Gail Hurdis, a Chase spokeswoman. But she declined to say what percentage of customers regularly remember to do so.

Read carefully how long the accelerated rewards will last. The BankAmericard Power Rewards, for instance, gives triple rewards on gas, grocery and pharmacy purchases but only for six months after the account is opened.

Alternately, a higher earnings rate might not kick in until you've reached a certain spending threshold. So be sure your spending habits are in sync with those requirements.

The other catch to keep in mind is that there could be caps on how much you can earn. So even if 5 percent sounds generous, the potential savings could be finite.

With the Chase Freedom card, the accelerated 5 percent rate only applies to the first $1,500 you spend on the selected categories. So the most you can earn on those categories is $75 over three months.

REDEEMING REWARDS

Cardholders often aren't diligent about redeeming rewards. It's similar to the consumer psychology at work with rebates: The promise of an incentive or rewards can be persuasive, but not everyone follows through with a claim.

Some cards let you set up automatic redemptions, perhaps every time your rewards reach $25, $50, $75 and so on. Otherwise, make a point of checking in once every few months to see whether it's time to cash in or you might find your rewards have vanished.

Even if a company touts that its points won't expire, there are other ways your cache of rewards can be wiped clean. With Costco's TrueEarnings Card issued by American Express, cardholders are issued a rewards coupon once a year. But those who miss payments for two or more billing periods forfeit their rewards for the entire year.

Also check what form the rewards come in. With gas company cards, rewards can be claimed only at that company's gas stations. And if you use your card to fill up at another station, you probably won't earn any rewards at all.

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Reach Candice Choi at www.twitter.com/candicechoi.






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