how fuel credit cards work

“For example, the Citi IndianOil credit card offers four Turbo Points per Spent at 150 authorized Indian Oil outlets, and the redemption value of one Turbo Point is 1. It means that if you spend 10,000 on fuel, you will earn 267 Turbo Points equivalent to 267 at Indian Oil outlets. In addition, you can earn points on other purchases as well, with additional points on groceries and supermarket spending,” said Sachin Vasudev, associate director and head of credit cards at Paisabazaar.com.

how do they work

Credit card issuers tie up with specific fuel retailers to allow the facility of fuel surcharge waiver at partner outlets as well as instant reward points on refueling expenses. Credit card issuers also allow you to redeem Reward Points or Fuel Points at refueling stations.

Raj Khosla, Founder and Managing Director, MyMoneyMantra.com explains, “Keeping in mind the annual car driving range of 15,000 km and average fuel economy of 10 km/l in a metro like Delhi, Mumbai or Bengaluru, a consumer would be buying 1500 liters of petrol. Does matter. at a cost of approx 95.41 for a liter of petrol in Delhi, you will spend 1,43,115 for buying 1,500 liters of petrol in a year.”

With monthly fuel purchases of more than You can easily accumulate reward points with a cash value of up to ₹12,000 3,800; This translates into a little over 40 liters of free fuel a year. The cumulative benefit on Fuel Cards will be higher after taking into account surcharge waiver and other club allowances.”

the profit

Fuel credit cards are helpful when you spend significant amounts on fuel. These cards reward you handsomely for your fuel spending along with basic earnings in other categories. Using these cards, you can earn reward points and redeem them to get free fuel. You’ll also save in the form of a fuel surcharge waiver. If you are loyal to a specific fuel provider, co-branded cards can be a good option as they offer additional privileges with partner brands. The Welcome Bonus and Milestone Bonus add to the overall value of the Fuel Card.

Adil Shetty, Chief Executive Officer, BankBazaar.com said, “The facility of Instant Rewards Points is a major attraction of a Fuel Card as you can earn Instant Reward Points of up to 5% on fuel purchases. 1% fuel surcharge waiver saves a lot. However, some card issuers have an upper limit on the total amount of discounts each month.” Plus, there are no restrictions on using these cards to buy fuel alone. Earn reward points in number of departmental stores.

borders

Fuel credit cards offer rewards on fuel purchases and usually have low fees that are waived off on minimum purchases. Therefore, it makes sense to consider a fuel credit card if you commute to work or regularly drive long distances.

Shetty said card issuers usually have predefined limits on instant reward points and surcharge waivers every month. Customers who spend more on fuel will be subject to limited benefits, irrespective of their total spend. “Further, the facility of fuel surcharge waiver and instant reward points is available only with the partner fuel retailer. You will not get reward points at non-partner fuel retailers,” Shetty said.

Therefore, you should be aware that most fuel cards are co-branded, and the best benefits may be available only if you use that brand of fuel.

Vasudev of Paisabazaar.com said, “Fuel cards are largely limited to providing benefits on fuel expenditure only, so you may not get significant rewards for other expenses. If you want to save, and also want rewards on other spends, then you should not consider the fuel card.”

things to note

You should keep an eye on your spending habits regularly. For example, if you’re a low driver or use public transportation a lot, your spending might not be enough to qualify for a fuel credit card. Also, check the list of petrol pumps to redeem the rewards. If they are too few or too far away or not available on your usual routes, you may not be able to access rewards in the right way at the right time.

When choosing a fuel credit card, you should consider its annual fee, reward rate, redemption terms and conditions, co-branded benefits, and what it offers other than fuel.

“If your fuel card has high joining fees and annual charges, it will drain your savings,” Shetty said. If the minimum spend for a fee waiver exceeds your normal spend, you will spend more than any actual savings on your card.”