Someone recently asked about BPme Rewards Visa credit card so I thought I would just discuss gas station cards in general but use this card as an example. The same would apply to all gas station credit cards. Simply put, anyone that is in any way serious about travel hacking should avoid these cards.
First, let’s look at the card itself. You can learn more about it here. The big draw to the BPme card is that you save 15 cents per gallon when you get gas at a BP or Amoco gas station. However, there’s a sign up bonus where you can save even more in the first 60 days. It’s usually 30 cents but right now it is 50 cents. That type of simple to understand math really draws in a lot of people. You also get 3% cash back on dining and groceries and 5% cash back on non-fuel purchases at BP and Amoco. These rewards are valued at 1 cents per point. There is no annual fee.
For purposes of this discussion, we’ll assume the sign up bonus is 50 cents off per gallon.
Here’s eight reasons why you should avoid gas station credit cards
1. It takes up a valuable 5/24 slot
Being under 5/24 is one of the most important things you can do when it comes to travel hacking. If you are under 5/24 your job is to keep it that way as long as possible while also getting as many cards as you possibly can with the highest sign up bonuses possible. That doesn’t seem to make sense on the surface but if you went through the rest of the travel hacking courses, it will make perfect sense. This of 5/24 like wishes from a genie. Are you going to make those wishes count or are you going to ask for a free Big Mac with one of them? If your answer is “well I’m under 5/24 so who cares” then you are just not serious about travel hacking in the first place.
2. BP and Amoco rarely have the cheapest gas
I’m sure there is someone somewhere that lives near a BP or Amoco that has the cheapest gas for 50 miles but for most of us, that’s just not the case. In the northeast, Wawa is known for their cheap gas. In other places, it’s Walmart. For those of you that belong to wholesale clubs, Costco and others are probably your go to place. So if that’s the case, you could be getting 50 cents off gas that’s 20 cents higher than other stations bringing your savings closer to 30 cents a gallon.
3. You are limiting yourself to certain gas stations
Although we all might have our go-to gas station, we can’t go there every single time. We do drive around and we have to get gas where we are. Also, there are plenty of times where all the gas stations in an area have jumped 30 cents but there’s that one gas station that’s holding out for another day so everyone rushes there. In either scenario, that’s going to reduce your savings.
4. The sign up bonus starts right away (which is a bad thing)
The website for this credit card says “Save 50¢ on every gallon3 at bp and Amoco stations for your first 60 days after account opening and 15¢ thereafter.” It says nothing about receiving the card and most credit card rewards start when the account is opened. You probably won’t get your card for a week later. That 60 days is now 53 days.
5. You can’t stack the points
Stacking is a great way to save money and earn more points. For example, if you really like going to a BP or Amoco, you can sign up for their free rewards program and earn 5 cents off for each gallon. However, these points don’t stack with the credit card discount. Thus, that discount you are getting is more like 45 cents off and 10 cents off after that since you are already getting that 5 cents without the card. With other credit cards you can stack their rewards with the 5 cents off per gallon.
6. They limit your ability to work on a sign up bonus
You should always be working on a sign up bonus or for some of you, you should be working on a sign up bonus as often as possible. If you are going to use up a valuable 5/24 slot with a card like this, you’ll always want to use it to make it worth it. But the problem is that you then won’t be able to use that spend on a sign up bonus. If you’re not spending a ton of money each month, every dollar counts and you’ll want to put your gas spend towards earning a sign up bonus. If you are spending a lot of money each month, then you could work on more card and cards with higher spending requirements like the Chase Inks. Sign up bonuses always take precedence over spending bonuses.
7. The math just doesn’t add up
This is difficult because everyone has different driving habits and needs. The price of gas also fluctuates. Estimates are a bit all over the places and hard to pin down but let’s assume you use 10 gallons per week. 53 days is 7.5 weeks. So 10 x 7.5 = 75 gallons. For purposes of this exercise, the price of gas is irrelevant. 75 gallons x 50 cents (.50) = $37.5. Let’s assume you drive a lot and use 20 gallons a week. The math is easy. You’ll save $75. Is that really worth using a 5/24 slot?
8. There are better credits out there
Let’s assume you just don’t care about 5/24 (not sure why you’d be even reading this but regardless) the math still doesn’t add up. There are a million credit cards we can compare this to but let’s use the Chase Freedom Unlimited (CFU) as it does not have an annual fee. As a reminder, the CFU earns 1.5x back on all purchases with a bonus of an additional 1.5x (for first year). You also get back 20,000 points after spending $500 within 3 months. Of course, there are other cards that earn more on gas but I’m trying to keep this simple. Right away we can see that you have more time to earn the bonus and the extra 1.5x goes for an entire year.
Let’s do some math. Assume gas is $3 per gallon and that you used 166 gallons of gas in 3 months. 110 in the first two months and 56 gallons in the third month.
With the BPme card, you’ll save $55 in the first 2 months (110 x .50 cents) and then $8.40 in the third month (56 x .15 cents). Your total savings would equal $63.40.
With the CFU, you would earn 1.5x plus 1.5x on all spending. The math is easy, $500 x 3 = 1,500 points. However, you would also earn a sign up bonus of 20,000 points making the total 21,500. Now if this is the only card you have and you convert these points to cash back at 1 cent per point (cpp) you would get $215! So I ask you, what’s better, $215 or $63.40? But wait, there’s more!
If you are working on the Chase Trifecta (and why wouldn’t you?) you either have a Chase Sapphire card or that will be your next card. You can then transfer those points to a travel partner. You should thus be getting at least 2cpp in value for those points. That would double the value of these points to $430! Can you see why travel hacking is so important?
All of this math assumes that BP or Amoco is the lowest possible price so you are really saving 50 cents and then 15 cents. If it isn’t every single time, then you are saving less than that. Even if BP or Amoco is the cheapest, I kept the math simple and didn’t include the 5 cents per gallon off for being a member of their free program which would stack with your Chase card (or any other card). While 5 cents isn’t going to push the needle, it’s still a few extra bucks in your pocket and it makes the math even that much worse for the BPme card.
Conclusion
I’m sure these gas station cards are right for someone. If you don’t care about travel hacking and you spend a lot of money on gas and you always go to the same gas station, then yes, this will probably make sense to you. Putting sign up bonuses aside, if you spend $500 on 166 gallons of gas, you’d save $25. If you earned 2x cash back on that $500 you’d get $10. Even at $4 gas, you’re saving $19. But again, the math only works if you go to a certain gas station most of the time. Of course, the math also only works if the gas station tied to your card is the cheapest gas in your area. But if you have any interest in travel hacking at all, these cards make no sense and should be avoided.
So why do people use them? They are very easy to understand and they require no effort whatsoever. Remember, travel hacking is not convenient. With just about anything in life, you pay for convenience. The more convenient something is, the more expensive it’s going to be. Don’t fall for slick marketing, signs, mailers, commercials, etc. Come up with a plan and stick to it.