6 top-rated gas-rebate cards

By Jim Mallery

Want to knock 20 cents a gallon -- even 40 cents -- off that upcoming $4-a-gallon gasoline?

Some gas-rebate credit cards can do just that.

Introductory rebates on these cards are now as high as 10%, while longer-term rewards tend to be in the 3% to 5% range.

Are they worth the hassle? If you're driving a 20-mpg car 15,000 miles a year on $4 gas, a 5% rebate would save you $150. But the wrong card could actually cost you money.

Any rewards card, whether air miles or gas rebates, is a gamble, really, that you can pay off the bill before the interest outweighs the rewards. Carrying a balance will probably wipe out any savings from a gas rebate. If you carry balances, your concern should be the lowest rate possible, not rewards.

Should you play?

But if you pay off your balance from month to month, doors open. You're free to hop from card to card, grabbing introductory rebate terms and jumping ship as they expire. For some people, that's a smart strategy.

The damage to your credit scores should be minor.

"Too much card hopping can be bad for your credit, it's true," CreditCards.com Editor-in-Chief Daniel P. Ray says. "But I'm willing to take an occasional big leap at a great deal."

CardRatings.com founder Curtis Arnold agrees: "Transferring a balance time after time can hurt your credit rating, but once a year probably won't hurt too much."

If you are going to card-hop, most experts advise that you keep your old cards open.

"Every time you close a card, you risk hurting your credit scores," says MSN Money columnist Liz Pulliam Weston, the author of three books on debt and credit. "The biggest reason is because you're reducing your available credit, which makes any balances you charge loom larger in the scoring formula."

And Arnold cautions that a person seeking a major loan -- such as a mortgage or home-equity loan -- might be wise to delay getting a new card.

A final note of caution: The best annual percentage rates, or APRs, are reserved for those with the best credit scores. Rates of some cards can vary by close to 10 percentage points, depending on your credit scores. And a person with truly bad credit scores might not be able to get a card at all.

Picking a card

To evaluate cards, Ray advises you consider two basic areas: driving habits and credit habits.

For instance, if you drive the same route daily and gas up at the same station regularly, then a card co-branded by that gasoline company might work best.

"They tend to have the best rebates because they know they have to sweeten the deal to win your loyalty," Ray says.

But, he says, if you tend to carry monthly balances on your cards, then you'll probably do that on a gas-rebate card as well, and the APR would become a concern.

"Seeking the lowest rate (APR) is probably the best for you" in that case, he says.

For instance, the Chase BP Visa Rewards card scores high on most every card-rating Web site. It offers a 10% gas rebate for the first two months on gasoline purchases at BP and Amoco stations and 5% thereafter.

The Chase BP card, however, has one of the higher APRs on balances: currently more than 12% (though it's 0% for the first year). If you usually carry balances, this may not be the card for you. If you don't keep the account open at least six months, you can lose the double rebates.

And Arnold notes that the Chase BP card gives no rebate for any purchases at establishments that sell gasoline other than BP or Amoco.

Continued: There's always a catch

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