Steve Willey, Thursday June 12, 2008
The cost of motoring has never been higher - and with the price of crude oil creeping towards the $140 mark, it's set to keep climbing. Yet there is one way you can save money at the petrol pumps - all you need is the right credit card. We show you how it's done
The price of crude oil hit an all-time high of $139 a barrel this week - pushing the price of petrol to an average of 117p a litre for unleaded and 130p a litre for diesel. Industry analysts expect the misery for motorists to worsen over the coming months.
The head of the world's largest energy firm - Gazprom chief executive Alexey Miller - last week warned that the price of crude oil could hit $250 a barrel. Such a rise would push up the cost of petrol to more than £2 a litre.
With such instability, it's never been more important to make savings on your fuel purchases. One way of offsetting some of the increases in fuel costs is to be clever with a credit card.
If you're able to keep on top of your finances and pay your balance off in full every month, a credit card that offers cashback or reward points could actually help you save money at the pumps.
Find a cheaper credit card - fast
How it works
The concept is straightforward. For every purchase you make using your credit card, the issuer pays you back a small percentage as a 'reward'. This is either in the form of cashback which is usually either rebated monthly onto your card or sent annually in the form of a cheque, or reward points which can be exchanged for vouchers and things such as days out and subscriptions.
The key is to find a card that you can use regularly - and if you're a motorist, a card that offers cashback on your fuel spending is ideal. The Citi Shell Mastercard offers 3% cashback on sums spent at Shell garages, with the cashback rebated to your card every month.
If you fill up £50 a week on fuel at a Shell petrol station, your annual outlay will be £2,600 a year. However, by shopping with the Citi Shell Mastercard you'd earn 3% cashback - that's equivalent to £78 off your annual fuel costs.
Other cards allow you to earn perks for each gallon of petrol you purchase. The Nectar Credit Card offers you 5,000 Nectar bonus points as long as you spend £200 within the first 90 days - and you'll earn double points on purchases for the first three months. In addition to the individual points you can earn for each litre of fuel purchased at any BP petrol station, this could help to slash your grocery bills if you shop at Sainsbury's.
If you don't regularly fill up at the same petrol station - perhaps because you travel to different places with work - you could still save money with a more traditional cashback card.
The American Express Platinum Moneyback Credit Card offers 5% cashback for the first three months on spend up to £4,000 and up to 1.5%. The Barclaycard Platinum Credit Card with Cashback includes 4% cashback until July 31 (up to a maximum of £30 cashback per month) and 0.5% until January 01, 2010. The Capital One cashback card meanwhile, offers 4% cashback on all purchases until September 01, 2008, and 1% thereafter - although the maximum spend is capped at £1,500 in any one statement period.
